Wednesday Morning Market: Caution ahead of Queen's Speech

Wall Street's overnight rally has so far made little impression on UK markets as investors keep on the sidelines ahead of the Queen's Speech.

By 8.30am the FTSE 100 index was 18 points adrift at 4,104, with ex-dividends in 3i Group, AB Foods, Johnson Matthey, Land Securities, London Stock Exchange, National Grid, Severn Trent and Vedanta Resources accounting for 2.41 FTSE points.

The Mid-250 index was 74 points weaker at 5,787.

Stagecoach was an early major loser at 145p, down 26p, a 33% dividend hike overshadowed by the group's challenging outlook for the UK rail division.

Other transport groups fell in sympathy with FirstGroup 20p lower at 410p and Go-Ahead Group 77p down at £10.95.

British Airways, at 150.5p, gave back 7p of yesterday's gain on further consideration of the planned merger with Qantas and a cautious Credit Suisse review on utilities unsettled Drax Group at 570p, down 19p.

Mining shares remained nervous in spite of a positive sector review from Citigroup. Rio Tinto lost 34p to £12.36.

Oils were also under pressure again with Cairn Energy 36p easier at £15.22 and Royal Dutch Shell down 25p to £16.28 as JP Morgan issued an underweight rating.

But a positive note from the same broker supported BG Group at 837p, up 9p.

Sage Group shed 5p to 153p in response to a mixed trading update.

Food retailers continued to benefit from yesterday's better-than-expected sales figures from Tesco, with William Morrison up 2.25p to 245.75p ahead of tomorrow's figures.

Insurances presented a brighter picture under the lead of Prudential at 323.5p, up 10p and Vodafone picked up 3p to 125p as it bought back its own shares.

David S Smith rallied 5p to 56.25p in spite of disappointing first-half profits, but negative broker comment contributed to a 10p fall in HMV Group at 112.25p.

Sports Direct softened 2.25p to 32.5p as the OFT investigated its stake purchase in JJB Sports and cautious comment on yesterday trading statement clipped 7p to Game Group at 138p.

Sibir Energy receded 30p to 70p on its proposal to buy real estate from Mr Tchigirinski and a profits alert cut 5p from Adventis Group at 12p.

Melrose Resources tumbled 19.25p to 188.75p on lower production forecasts.