Banks, energy stocks dent FTSE ahead of US data

Published 10/08/2010, 04:37 AM
Updated 10/08/2010, 04:40 AM
SI
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* FTSE 100 falls 0.2 percent

* Barclays leads banks lower, miners gain

* Moves muted ahead of U.S. monthly jobs report

By Simon Falush

LONDON, Oct 8 (Reuters) - UK share prices fell slightly in early trade on Friday, with investors cautious ahead of the closely-watched U.S. monthly jobs figures due at 1230 GMT.

Miners were mostly higher but Barclays led banks lower after a stake sale from Abu Dhabi.

By 0751 GMT the FTSE 100 was 0.2 percent or 13.72 points lower at 5,648.41 after it closed 0.3 percent lower on Thursday.

Banks were a drag on the index as an effective stake sale by a key Abu Dhabi investor in Barclays saw its shares fall 2.3 percent.

Abu Dhabi exercised 131.6 million warrants in the bank, equivalent to a 1.1 percent stake, and simultaneously entered into a complex hedging arrangement with Nomura, it said in a statement after Thursday's close.

Other banks were also lower with Lloyds Banking Group down 0.2 percent and Standard Chartered off 0.1 percent.

The U.S. non-farm payrolls data is forecast to show no change but analysts said markets are unlikely to show much negative reaction even if the numbers undershoot, as this will increase the chances of money printing by the Federal Reserve.

"People are fairly optimistic about data and the likely consequences of quantitative easing," Jeremy Batstone-Carr, head of research at Charles Stanley said.

"It's a no-lose situation. If the figure is better, that's supportive, if it's worse then people will be thinking about quantitative easing," he said.

Energy stocks were also a drag on the index, as crude prices stabilised. BP fell 1 percent.

U.S. stocks ended mixed on Thursday, and in extended trade U.S. aluminium producer Alcoa Inc rose 3.2 percent after kicking off the start to the U.S. third-quarter earnings season after the closing bell.

It reported a lower profit for the quarter, but said global markets were strengthening.

This helped miners, the biggest support to the index, gain ground. BHP Billiton and Rio Tinto both added around 1 percent.

Silver miner Fresnillo fell 2.4 percent, however, after Merrill Lynch cut its rating on the stock to "underperform" from "neutral".

The dollar came under pressure again on Friday, starting to lose gains its made from a bout of profit-taking to adjust positions ahead of the U.S. jobs data and Group of Seven (G7) and IMF meetings later in the week.

On the domestic macroeconomic front, UK producer price index data is scheduled for release at 0830 GMT.

With the index trading in a tight range, technical levels will be closely watched.

"The September highs just around 5,630/5,640 should offer a modicum of support while the FTSE needs to consolidate above 5,700 to push on towards 5,790 and then the highs this year at 5,835," Michael Hewson, market analyst at CMC Markets said.

Sage Group fell 2.1 percent after UBS downgraded its rating on the accountancy software firm to "sell" from "neutral", with the broker highlighting a number of problems for Sage's new CEO.

Among mid-caps, Thomas Cook was the top gainer, up 3.5 percent after Europe's second-biggest tour operator said it plans to merge its high street and foreign exchange business with that of British retailer the Co-operative Group to create the country's largest retail travel network. (Editing by Greg Mahlich)

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