The FTSE 100 was trading down 0.2% at 6,591 in early trading.

Mining stocks were among the worst performers with Antofagasta suffering from a broker downgrade, while Smiths Group fell after giving cautious guidance for the full year.

The index gained 0.5% on Tuesday after Vladimir Putin said he did not plan to send more troops further into Ukraine. The Russian President signed a treaty yesterday to incorporate Crimea into the Russian Federation following this weekend’s landslide referendum for the region to leave Ukraine.

However, developments overnight are likely to keep investors’ nerves on edge after a Ukrainian officer was killed by Russian forces near the Crimean capital of Simferopol.

Ukrainian Prime Minister Arseniy Yatsenyuk called the shooting a “war crime” and said that the conflict between the neighbouring nations is “moving from a political one to a military one”.

Closer to home, Osborne will deliver his 2014 Budget at 12:30. However, given that there is just 14 months to go before the General Election, analysts at FxPro said they are expecting this Budget to be “more of a political an than economic one”.

“The affect this has on sterling or the FTSE 100 is often overplayed but this won’t stop investors from keeping a close eye, in particular when the Office of Budget Responsibilities growth forecasts are announced,” they said.

Meanwhile, the two-day meeting of the Federal Open Market Committee concludes this evening and will be in focus for US markets later on with policymakers widely expected to continue tapering their asset purchase programme by $10bn a month.

Antofagasta leads miners lower, Smiths Group drops

Copper producer Antofagasta was among the worst performers this morning after Credit Suisse downgraded its rating from ‘neutral’ to ‘underperform’ following the stock’s outperformance over recent months.

“With the positive of better-than-expected cost-cutting now played out together with heightened uncertainty around copper prices we downgrade the shares,” the bank said.

Other miners, including heavyweights Anglo American, Glencore Xstrata and Rio Tinto, were also down this morning, tracking weakness in metal prices.

UK manufacturing firm Smiths Group fell sharply despite reporting a smaller-than-expected decline in adjusted profits in its first half, as the company warned that foreign exchange headwinds will increase towards the end of the year. Judging by current exchange rates, currency movements will have a 4-5% impact on earnings for the full year, compared with only a marginal impact in the first half.

Global banking group HSBC was also under the weather after Credit Suisse lowered the stock by two notches from ‘outperform’ to ‘underperform’ and slashed its target price. The bank said that despite strong capital generation, it “no longer expect[s] a significant additional capital return in the next 24-36 months”.

Leading the upside was housebuilder Persimmon and engineering group Rolls-Royce after UBS raised both names to ‘buy’.

On the FTSE 250, the share price of Ophir Energy sunk after the company said it has failed to encounter significant hydrocarbons at the Padouck Deep-1 well in the Ntsina Block offshore Gabon.

Chief executive Nick Cooper said: “The Padouck Deep-1 result is disappointing but its failure appears to be prospect-specific and does not dampen our enthusiasm for the broader pre-salt play offshore Gabon.”

FTSE 100 – Risers
BAE Systems (BA.) 415.00p +1.77%
Persimmon (PSN) 1,385.00p +1.32%
Reckitt Benckiser Group (RB.) 4,876.00p +1.31%
Rolls-Royce Holdings (RR.) 1,073.00p +1.23%
Barclays (BARC) 238.90p +1.21%
Vodafone Group (VOD) 228.30p +0.75%
Aberdeen Asset Management (ADN) 379.00p +0.69%
Old Mutual (OML) 193.00p +0.63%
Centrica (CNA) 336.10p +0.60%
Shire Plc (SHP) 3,140.00p +0.51%

FTSE 100 – Fallers
Smiths Group (SMIN) 1,274.00p -5.70%
Antofagasta (ANTO) 798.50p -3.62%
Anglo American (AAL) 1,429.00p -2.62%
InterContinental Hotels Group (IHG) 1,885.00p -1.72%
Glencore Xstrata (GLEN) 306.25p -1.67%
Travis Perkins (TPK) 1,869.00p -1.48%
easyJet (EZJ) 1,605.00p -1.23%
ITV (ITV) 200.90p -1.03%
Kingfisher (KGF) 406.70p -1.00%
RSA Insurance Group (RSA) 95.35p -0.99%

Source: ShareCast