London close: Stocks fall as markets await Fed, ECB

A disappointing reading of business activity in the States sparked a late sell-off on UK financial markets on Tuesday afternoon as traders turned nervous ahead some key risk events later this week.The Chicago purchasing managers' index (PMI), one of the leading economic indicators in the US, dropped to a three-and-a-half-year low of 49.0 in April from 52.4 the month before, surprising analysts who had expected a slight rise to 52.5. This sub-50 figure now implies that business activity in the region is now in contraction. Benchmarks on Wall Street reacted with a mixed start, while the FTSE 100 in London extended losses following the data, as markets shrugged off a surprise rebound in US consumer confidence and an improvement in American home prices this month.Markets on the whole were on the cautious side today as investors awaited the outcomes of the Federal Reserve and European Central Bank (ECB) meetings this week. The Fed is expected to maintain the current rate of it quantitative easing programme given weaker-than-forecast growth in the first quarter, while the ECB is predicted to reduce its key interest rate in an effort to ease the pressure on member nations. Market Analyst Craig Erlam from Alpari said that a rate cut in Europe is already priced into markets. "What this means for Thursday is that if the ECB puts off cutting rates for another month, we could see a strong sell-off in response." FTSE 100: Lloyds rises after Q1 results impressMarkets gave a positive reaction to first-quarter results from banking giant Lloyds, with the stock rising sharply after profits came in slightly ahead of consensus estimates and the company reduced its full-year cost guidance. The stock jumped to a 52-week high of 57.21p in intraday trade, not far off the 61p price at which the government could break even it its 39 per cent stake in the lender is sold.Sector peer RBS was in demand ahead of its interim management statement on Friday. Oil major BP was also a high riser after replacement cost profits jumped from $4.8bn to $16.6bn in the first quarter, helped by proceeds from the disposal of its interest in the TNK-BP joint venture. Costa owner Whitbread however was out of favour despite recording a double-digit increase in annual revenue, profit and the dividend in the face of adverse weather conditions. Mining group Anglo American was lower after UBS reduced its target price from 2,000p to 1,720p and retained a 'neutral' rating on the stock. Its subsidiary, Amplats, has agreed with the Department of Mineral Resources to extend their consultation on safety by 30 days to allow them more time to reach a conclusion. Sector peers Polymetal and Randgold were also lower as they tracked a decline in commodity prices. Centrica declined after Credit Suisse lowered its target price from 325p to 320p and downgraded the stock to 'underperform'. FTSE 250: Invensys boosted by upgradeInvensys was given a lift by Societe Generale which upgraded the firm from 'hold' to 'buy', saying that the engineering and software company has an improved investment profile with substantial margin and M&A upside. Meanwhile, platinum miner Lonmin was a heavy faller after reporting saying that it has had to shut down one of its furnaces due to an "incident" which will take 30-40 days to repair. Heritage Oil disappointed after posting wider full year pre-tax losses from continuing operations for 2012, while NMC Health failed to impress despite posting an 11% year-on-year increase in first-quarter revenues to $139m.FTSE 100 - RisersRoyal Bank of Scotland Group (RBS) 306.30p +4.18%BP (BP.) 466.40p +2.11%Pearson (PSON) 1,171.00p +1.83%ARM Holdings (ARM) 996.00p +1.74%Lloyds Banking Group (LLOY) 54.33p +1.55%Petrofac Ltd. (PFC) 1,350.00p +1.50%Morrison (Wm) Supermarkets (MRW) 292.10p +1.28%Croda International (CRDA) 2,478.00p +1.18%Legal & General Group (LGEN) 169.50p +0.71%Serco Group (SRP) 618.50p +0.65%FTSE 100 - FallersPolymetal International (POLY) 695.50p -5.95%Randgold Resources Ltd. (RRS) 5,060.00p -4.08%Admiral Group (ADM) 1,281.00p -3.32%Standard Life (SL.) 374.20p -2.93%Wood Group (John) (WG.) 775.00p -2.76%Anglo American (AAL) 1,565.00p -2.73%Xstrata (XTA) 963.50p -2.64%Glencore International (GLEN) 316.95p -2.48%CRH (CRH) 1,382.00p -2.40%Fresnillo (FRES) 1,152.00p -2.37%FTSE 250 - RisersRenishaw (RSW) 1,646.00p +5.65%Afren (AFR) 134.10p +5.51%Invensys (ISYS) 384.70p +5.46%Jupiter Fund Management (JUP) 330.50p +2.99%Spirax-Sarco Engineering (SPX) 2,623.00p +2.82%Unite Group (UTG) 347.80p +2.63%Alent (ALNT) 339.20p +2.51%Victrex (VCT) 1,605.00p +2.36%Savills (SVS) 582.00p +2.19%Synthomer (SYNT) 200.90p +2.19%FTSE 250 - FallersNMC Health (NMC) 310.00p -8.23%Heritage Oil (HOIL) 160.00p -5.99%Petropavlovsk (POG) 145.00p -5.84%Lonmin (LMI) 269.00p -5.71%Hochschild Mining (HOC) 248.50p -5.51%Imagination Technologies Group (IMG) 425.40p -4.60%Paragon Group Of Companies (PAG) 312.40p -4.38%Grainger (GRI) 136.00p -4.23%FirstGroup (FGP) 211.10p -4.09%African Barrick Gold (ABG) 175.00p -3.95%BC