The Treasury sold 4.3bn shares at a price of 75p each. Part-nationalised peer RBS was also lower early on.

Barclays was also lower after it was reported yesterday that it is facing a £50m fine for allegedly breaching market listing rules over its capital raisings. The bank also said that its adjusted income for July and August was lower than in the same period of the previous year, resulting in a 5% year-on-year decline in adjusted income for the eight-month period to August 31st.

Mining stocks were also out of favour as risk appetite was scaled back ahead of the Fed decision – Vedanta Resources, Glencore Xstrata, Rio Tinto and Anglo American were among the FTSE 100’s worst performers .

Glencore Xstrata was being weighed down by UBS which lowered its rating from ‘buy’ to ‘neutral’, saying that a “challenging” price outlook will cap share-price performance.

Randgold however bucked the trend as gold prices rebounded after hitting a five-week low the day before.

Following a strong start to the week, investors turned cautious ahead of the conclusion of the Federal Open Market Committee (FOMC) meeting tomorrow afternoon as markets ready themselves for one of the most closely-watched US policy decisions in recent years, given rising expectations that the Fed will begin to scale back its quantitative easing (QE) programme.

The FTSE 100 was registering small losses early on, retreating from Monday’s close of 6,622.86 – this was the best close for London’s benchmark index since August 2nd, when it finished the day at 6,647.87.

“The two-day event is certain to install some trepidation in investors with the majority of economists surveyed of the belief that Fed policymakers will cut monthly bond buying by $10bn to $75bn per month,” said Financial Sales Trader Max Cohen from Spreadex.

Source: ShareCast