LONDON: Britain's top shares fell on Tuesday as energy stocks weakened and the market tried to gauge whether Scotland will vote to leave the United Kingdom.
Stocks showed little reaction to comments from Bank of England Governor Mark Carney suggesting the bank might start to raise interest rates next spring.
The decline was led by major energy stocks, including Royal Dutch Shell and BG Group, which fell about 1 percent, as the price of Brent crude eased for a fourth straight day. The blue-chip FTSE 100 was down 16.70 points, or 0.2 percent, at 6,818.07 points by 1440 GMT.
It had also slipped on Monday as sterling fell to its lowest against the dollar in nearly 10 months, amid signs of growing support for Scottish independence.
With some 75 percent of revenues from UK blue chips coming from overseas, a weaker pound is a silver lining for many.
But political uncertainty had the upper hand on Monday, pushing the FTSE 100 down 0.3 percent as companies with strong ties to Scotland lost ground.
Thin trading volumes suggested some investors were stepping aside pending the outcome of the Sept. 18 referendum. The FTSE 100 had traded at just 60 percent of its 90-day daily average heading into the close. "
We are actually not doing much until the Scotland vote," said Mark Ward, the head of trading at Sanlam Securities.
"We are fairly cautious." But Mike McCudden, the head of derivatives at Interactive Investor, saw room for a rebound, with the index adding about 1 percent below its Sept. 4 multi-year high of 6,904.86.
"This could actually present a buying opportunity ... the fall in the value of sterling has made UK stocks considerably more attractive, which might provide underlying support."
The pro and anti-independence campaigns in Scotland are running neck-and-neck nine days before the referendum, a TNS poll showed on Tuesday.
A YouGov poll for the Sunday Times had shown a narrow lead for the "Yes" camp. Some traders still felt the anti-independence side would finally prevail.
"It's on a knife-edge, but I still think the 'No' campaign will win. There could be a bit of a pullback in the run-up to the vote due to the uncertainty over the issue," said Charles Hanover Investments partner Dafydd Davies.
He too would look to buy the FTSE 100 on any dips. US bank Citi also said it expected a narrow defeat for supporters of Scottish independence at the Sept. 18 vote.
Separately, Citigroup upgraded its rating on Wm Morrison to "buy" from "neutral", arguing that the grocer's dividend looked safe. This helped lift Morrisons by 3 percent.
Good gains were seen among the housebuilders ahead of full-year results from Barratt Developments on Wednesday.
But some traders called a top on a strong rally seen from the sector, even in the event Barratt reported strong numbers.
The Thomson Reuters UK Homebuilding index, up 6 percent in 2014, doubled in value during the past three years, boosted by tight supply and UK initiatives to spur the job-intensive sector, such as the 'Help-to-Buy' mortgage scheme.
"I think the heat has come out of the sector myself," said Ed Woolfitt, head of trading at Galvan. He cited the prospect of an interest rate hike as a cause for concern.
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