Lloyds falls as government sells 6% stake

In mid-morning trading the FTSE 100 is down 20 points as traders square their positions ahead of the US Federal Reserve announcement tomorrow.

FTSE 100 dealers are beginning to lock in profits from yesterday's rally, with speculation of a $10 billion tapering in the Fed's bond-buying scheme. The only way dealers will be surprised is if the trim is more or less than $10 billion. Investors are reacting well to the rumour that Janet Yellen will take over the new Fed chair from Ben Bernanke in the new year, as Ms Yellen is more likely to keep the QE tap flowing.

Lloyds Banking Group is leading the UK's banks lower as the reprivatisation of the troubled lender begins; the government has sold off a 6% stake in the bank and things are probably going to get worse before they get better. Fresnillo has clawed back some of its losses from yesterday after the stock was hit by a Mexican mining tax and exclusion from an exchange traded fund. ASOS has lost 6% in early trading after Morgan Stantley cut its rating to underweight; the move comes ahead of the online retailer's results on Thursday.

We are expecting the Dow Jones to open ten points lower at 15,484, as dealers cash in their chips before more tapering talk circulates.

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