London midday: Oil stocks lead markets higher ahead of FOMC

- FOMC meeting to keep traders cautious- Iraq tensions escalate as rebels attack refinery- BoE in focus amid rate-hike speculationtechMARK 2,800.97 +0.23%FTSE 100 6,795.76 +0.43%FTSE 250 15,610.03 +0.16%UK equities rose on Wednesday ahead of a policy decision at the Federal Open Market Committee as oil stocks helped the FTSE 100 continue to rebound after hitting a seven-week low earlier in the week.London's benchmark index was trading 0.4% higher at 6,796 by around midday, rising for the second day after finishing at 6,754.64 on Monday, its worst close since April 25th.Nevertheless, gains were only modest this morning as investors kept a close eye on developments in Iraq and refrained from taking on too much risk ahead of the Fed meeting, causing US stock futures to tread water in pre-market trade. Market Analyst Craig Erlam from Alpari UK said: "We're potentially seeing a little bit of caution from traders ahead of the [US] opening bell on Wednesday, given the FOMC decision and press conference later which always has the potential to create big moves in the markets."Islamist-led militants have attacked Iraq's biggest oil refinery in Baghdad with machine guns and mortars, according to reports. The militants destroyed some stores of oil early this morning after entering the complex, refinery staff told AFP news agency. The news comes as the government fights against the Islamic State in Iraq and the Levant ISIS and its Sunni Muslim allies in Diyala and Salahuddin provinces, after they took over the second city, Mosul, last week. Brent crude futures edged 0.04% higher to $113.49 a barrel.Central banks in focusThe Fed is expected to announce a further tapering of quantitative easing when the central bank wraps up its policy meeting later this evening. Analysts predict the Fed will cut another $10bn off its monthly bond purchase programme to take the total to $35bn.However, following Tuesday's release of the latest US inflation data, which showed prices rose more than forecast, some analysts now believe the Fed may consider raising interest rates sooner than it had been expecting. US consumer prices rose by 0.4% month-on-month and 2.1% year-on-year in May, surpassing analysts' estimates. In other news, Bank of England policymakers voted unanimously to hold interest rates this month, minutes from the latest meeting showed. However, they expressed surprise that markets had under-estimated the chance of a hike later this year.While comments from Governor Mark Carney last week brought forwards expectations of a rate hike, yesterday's sharper-than-expected dip in UK inflation to a four-and-a-half year low of 1.5% will have clouded the outlook for monetary policy.Shell leads oil stocks higherRoyal Dutch Shell rose strongly amid reports that it is set to extend a deal with state-owned China National Offshore Oil Corporation (CNOOC) to work on liquefied natural gas projects. The group also announced yesterday that it is to raise around $5bn after tax through the sale of a hefty chunk of its stake in Australian energy group Woodside Petroleum.Other stocks in the sector such as BP, Tullow and BG Group were also making gains as crude prices continued to climb.Housebuilder Berkeley Group slumped despite recording a better-than-expected 40.4% jump in annual pre-tax profits as the company gave a cautious outlook, saying it "remains alert to the uncertainty which will arise from changes to the economic and political landscape".Home-shopping business N Brown also disappointed as 2.5% like-for-like (LFL) revenue growth in the 15 weeks to June 14th came in below analysts' expectations. Oriel Securities said that the company will need to do "very well to achieve our first-half target of +6% LFL".Heavyweight utilities groups Severn Trent and United Utilities were both trading lower this morning after going ex-dividend. Land Securities, 3i Group, 3i Infrastructure and Restaurant Group were also automatically lower as they traded without the access to their latest dividend payments.FTSE 100 - RisersRoyal Dutch Shell 'B' (RDSB) 2,543.00p +2.17%Royal Dutch Shell 'A' (RDSA) 2,417.00p +1.92%Imperial Tobacco Group (IMT) 2,673.00p +1.29%Vodafone Group (VOD) 197.75p +1.28%Rio Tinto (RIO) 3,087.50p +1.26%AstraZeneca (AZN) 4,416.50p +1.16%BHP Billiton (BLT) 1,873.50p +1.13%BG Group (BG.) 1,274.00p +1.11%Bunzl (BNZL) 1,641.00p +0.98%Compass Group (CPG) 1,013.00p +0.90%FTSE 100 - FallersUnited Utilities Group (UU.) 855.50p -3.44%WPP (WPP) 1,256.00p -2.48%Severn Trent (SVT) 1,922.00p -2.39%IMI (IMI) 1,529.00p -2.24%Travis Perkins (TPK) 1,563.00p -2.01%Sports Direct International (SPD) 755.50p -1.31%Babcock International Group (BAB) 1,177.00p -1.09%Barratt Developments (BDEV) 345.40p -1.03%Ashtead Group (AHT) 823.50p -0.96%Petrofac Ltd. (PFC) 1,239.00p -0.88%FTSE 250 - RisersFerrexpo (FXPO) 130.80p +3.40%BH Global Ltd. USD Shares (BHGU) 11.9 +3.30%NMC Health (NMC) 460.00p +3.23%PZ Cussons (PZC) 352.10p +3.13%RPS Group (RPS) 273.30p +3.13%Keller Group (KLR) 949.50p +3.09%PayPoint (PAY) 1,118.00p +2.95%Diploma (DPLM) 630.00p +2.86%Evraz (EVR) 91.15p +2.76%Taylor Wimpey (TW.) 105.60p +2.52%FTSE 250 - FallersBerkeley Group Holdings (The) (BKG) 2,155.00p -4.69%3i Group (III) 393.80p -4.35%Xaar (XAR) 517.00p -3.72%Thomas Cook Group (TCG) 133.10p -3.48%Restaurant Group (RTN) 559.50p -2.44%African Barrick Gold (ABG) 218.20p -2.37%Brown (N.) Group (BWNG) 425.40p -2.25%3i Infrastructure (3IN) 135.30p -2.24%Supergroup (SGP) 836.00p -2.05%Workspace Group (WKP) 561.50p -1.66%BC