Healthcare, real estate losses drag UK shares; Fed in focus

(Reuters) -British stocks closed lower on Wednesday as losses in healthcare and real estate shares offset positive trade talk developments, while investors awaited the U.S. Federal Reserve's interest rate decision due later in the day.

The blue-chip FTSE 100 fell 0.4%.

The domestically focused FTSE 250 slipped 0.1%.

However, brokerage Barclays upgraded the FTSE 250 to 'overweight' from 'market weight', expecting stocks to benefit from the Bank of England's interest rate cuts, with one expected on Thursday.

Healthcare stocks led the decline among sectors, down 2.2%, after the U.S. Food and Drug Administration named Vinay Prasad, an oncologist who has previously criticized FDA leadership and COVID-19 mandates, as the director of its Center for Biologics Evaluation and Research.

Shares of AstraZeneca and GSK fell 1.8% and 4.9%, respectively.

Rentokil Initial fell 3.3%, among the top FTSE 100 losers, after it said long-serving CEO was set to retire.

The real estate sector slipped 1% after an industry survey showed that activity in Britain's construction sector contracted for a fourth month in a row in April.

Losses came despite some progress on the global trade front, after Washington said U.S. and Chinese officials would meet in Switzerland this weekend for talks that could be the first step towards resolving a trade war disrupting the global economy.

"The fact that there's a meeting taking place at all is an advance on where we were some weeks ago, but it's probably too much to expect a resolution on the basis of one meeting as there are so many interrelated and complicated issues to address," AJ Bell investment director Russ Mould said.

    Meanwhile, the U.S. and Britain have made good progress in negotiating a trade deal that would likely include lower tariff quotas on steel and autos, a UK official said on Tuesday. 

Investors are now eyeing the Fed's interest rate decision later in the day, with markets expecting no change to policy.

Among individual stocks, J D Wetherspoon's shares gained 6.1% after the British pub group's third-quarter sales rose.

(Reporting by Ragini Mathur, Twesha Dikshit and Sanchayaita Roy in Bengaluru; Editing by Tasim Zahid and Mark Potter)