By Sruthi Shankar and Shubham Batra
(Reuters) -The UK's blue-chip index fell on Wednesday, hurt by losses in energy shares and Vodafone (LON:VOD), while investors awaited comments from Federal Reserve Chair Jerome Powell after the U.S. central bank's policy decision later in the day.
The blue-chip FTSE 100 slipped 0.5%, with heavyweights Shell (LON:RDSa) and BP (LON:BP) weighing on the index with a 1% slide, tracking oil prices lower.
UK stocks logged their worst month since October as investors scaled back bets of aggressive interest rate cuts from major central banks, with concerns about China's slowing economy adding to the gloom.
Vodafone fell 2.1% after French telecom operator Iliad said its British peer rejected a sweetened proposal to merge their Italian businesses.
Harbour Energy (LON:HBR) slid 5.4% to the bottom of the mid-cap index after Goldman Sachs (NYSE:GS) downgraded the oil and gas producer's shares to "sell" from "buy".
GSK was among the top performers on the FTSE 100 with a 2% jump after the drugmaker beat market estimates for fourth-quarter results.
All eyes will be on the Fed, which is widely seen holding interest rates later in the day, with focus on Powell's post-meeting press conference and any hints on how soon the Fed could begin easing rates.
"The main question for the Fed is whether just getting inflation back to mandate is all that is necessary to start an aggressive cutting cycle at a time when growth is pretty good, unemployment is at secular lows and asset prices are at highs," said Bob Elliott, CEO and CIO of Unlimited Funds.
The Bank of England is set to release its policy decision on Thursday.
Meanwhile, British house prices rose more than economists had expected in January, adding to signs that the squeeze from high interest rates is beginning to ease, figures from mortgage lender Nationwide Building Society (LON:NBS) showed.