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LONDON (Alliance News) - Investors traded cautiously ahead of Federal Reserve Chair Janet Yellen's speech Tuesday, while a fall in oil prices kept the FTSE 100 blue-chip index subdued.

Oil prices fell to their lowest level in nearly two weeks, with Brent hitting a low of USD38.77 a barrel. It was quoted at USD38.84 at the London stock market close. This was below the USD40.23 a barrel seen at the last London close on Thursday last week.

West Texas Intermediate fell to a low of USD37.89. At the London close the US benchmark was at USD37.96.

IG's senior market analyst Chris Beauchamp thinks the fall in the oil price is down to diminishing chances of an agreement to freeze supply in upcoming meetings of the Organization of the Petroleum Exporting Countries.

"Investors had previously hoped that an OPEC meeting would fix further production freezes, but those hopes are now being dashed. Iran, still revelling in its new crude output, has also indicated that it does not intend to join in any cap on production," Beauchamp said.

The fall in oil price hit oil stocks with BP, down 2.1%, and Royal Dutch Shell 'A', down 1.6% both amongst the worst performers in the FTSE 100.

The price of gold reversed early losses to trade higher late Tuesday. The precious metal traded at USD1,225.74 an ounce at the close versus USD1,219.87 at the same time on Thursday.

The FTSE 100 traded within a narrow margin for most of the afternoon and closed down 0.58 points, at 6,105.90. The mid-cap FTSE 250 index was more resilient, ending up 0.5%, or 81.97 points, at 16,756.32, while the AIM All-Share ended down 0.1%, or 0.61 points, at 708.19.

The main European indices ended higher, with the CAC 40 in Paris up 0.9% and the DAX 30 in Frankfurt up 0.4%.

On Wall Street at the London close, the Dow Jones Industrial Average was down 0.2%, the S&P 500 was down 0.1% and the Nasdaq Composite was up 0.4%.

In US economic news, the consumer confidence index rebounded in March according to a report by the US Conference Board.

The consumer confidence index climbed to 96.2 in March from an upwardly revised 94.0 in February. Economists had expected the confidence index to rise to 94.0 from the 92.2 originally reported for the previous month.

The increase in the headline index came as consumers were more optimistic about the short-term outlook for the US economy, with the expectations index jumping to 84.7 in March from 79.9 in February.

Investors will now be looking ahead to Federal Reserve Chair Janet Yellen's speech to the Economic Club of New York at 1720 BST. The market will be interested to hear whether Yellen echoes the hawkish tone of her colleagues last week, which contradicted the dovish Federal Open Market Committee statement in March.

In a speech in Singapore early Tuesday morning, San Francisco President John Williams said he sees continued economic growth in the US and shrugged off concerns about the global downturn.

"Growth expectations may be slightly tempered, but that's a far cry from the triage bay we were in eight years ago," Williams said.

"My view is essentially, let's just stay on track," he said. "Let's not get sidelined by the noise and distraction commentary can sometimes cause."

At the London equity market close, the pound traded the dollar at USD1.4271, versus USD1.4154 at the last London close on Thursday. The euro was at USD1.1189 at the close Tuesday, versus USD1.1172 on Thursday.

UK banking stocks were among the worst performers in the FTSE 100 after the Bank of England's Financial Policy Committee said lenders must begin building up capital buffers to ensure they have the ability to continue lending in times of stress.

The Financial Policy Committee increased the UK countercyclical capital buffer rate to 0.5% of risk-weighted assets from zero, with the new setting applying to UK banks and building societies, as well as to branches of EU banks lending into the UK.

In the FTSE 100, HSBC Holdings and Royal Bank of Scotland Group, both down 1.3%, were among the biggest blue-chip fallers.

On the other side of the index, easyJet closed up 1.6% at 1,525.00p, after Bank of America Merrill Lynch upgraded the stock to Buy from Neutral, with a price target increase to 1,800.00p from 1,660.00p.

The bank said easyJet has been the worst performing stock in its European airline coverage in 2016, but it believes the challenges facing the company look manageable.

In the AIM All-Share, Ascent Resources' share price more than doubled after Cadogan Petroleum confirmed it has made a "highly preliminary approach" to potentially combine the company with Ascent, but stressed there is no guarantee of a deal.

Ascent said it had received a preliminary takeover approach from Cadogan late last week. The approach may or may not lead to a firm offer being made, Ascent said. Cadogan has until April 21 to make a firm offer or walk away from the deal under UK takeover rules.

Cadogan shares ended up 10% .

CDialogues ended as the worst performer in the AIM All-Share, down 43%. The mobile marketing services company said its earnings for 2015 will be significantly lower due to weaker revenue and squeezed margins.

The company said earnings before interest, taxation, depreciation and amortisation will be less than EUR1.6 million for the year to the end of December, compared to EUR2.9 million the year earlier. The group said revenue was weaker and project margins were thinner.

Revenue in the first quarter of 2016 has been weaker than anticipated. Revenue from its new mobile network operator client in Latin America has been delayed due to integration issues, CDialogues said, and the project may now be cancelled as a result.

In the economic calendar for Tuesday, Japanese industrial production is at 0030 BST, eurozone consumer confidence and business climate surveys are released at 1000 BST and US MBA mortgage applications are at 1200 BST. Later in the afternoon are German inflation figures at 1300 BST and US ADP employment change at 1315 BST.

In the UK corporate calendar, FTSE 100-listed cruise operator Carnival reports first quarter results, while FTSE 250-listed food wholesaler and convenience store operator Booker Group publishes a trading statement.

There are also full-year results for online financial trading company London Capital Group, digital marketing services business XLMedia and employee benefits products company Personal Group Holdings amongst others.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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