London - Britain's top equity index fell to a three-week low on Friday, with banks and miners underperforming, as jitters ahead of US data that could provide hints about the timing of a rate hike weighed on shares.
Weak UK manufacturing data on Friday also kept the London stock market on the back foot, with the blue-chip FTSE 100 equity index down by 1.2 percent, or 83.01 points, at 6,647.10 points by the middle of the trading day.
After this week's strong economic growth data from the United States, investors' focus has shifted to US jobs data, due at 14:30 SA time.
Non-farm payrolls are predicted to have risen by 233,000 in July, which would mark the sixth month with job growth above 200,000.
Some analysts predicted a higher number, with Societe Generale forecasting that 280,000 net new jobs were created during the month.
A stronger number would spark concerns that the US Federal Reserve could raise interest rates sooner than some have expected, and the prospect that rates could go up earlier than forecast sent major US stock markets down by around 2 percent on Thursday.
“The mode is to sell on any rallies,” said Beaufort Securities sales trader Basil Petrides.
A fall in major bank and mining stocks took the most points off the FTSE.
The FTSE 350 Banking Index was down by 1.3 percent while the equivalent mining index.
Those two sectors often underperform weaker stock markets, and are especially sensitive to signs of economic stress.
They suffered on Friday due to concerns that any unexpected and sharp US interest rate rise could impact the global economic recovery.
Banks were also hit after Royal Bank of Scotland fell 2.6 percent.
The part-nationalised bank reiterated on Friday that a vote by Scotland to become independent from the rest of the United Kingdom could significantly increase its costs.
Investec analyst Ian Gordon cut his rating on RBS to “sell” from “hold”, arguing that RBS still faced pressures from litigation costs and impairment charges.
“We continue to forecast negative earnings and anaemic returns,” said Gordon. - Reuters