FTSE dips as investors eye US jobs data

The FTSE 100 fell in early trading with investors cautious ahead of key US jobs data and still absorbing moves by three central banks to get their country's economies back on track.

Banks in China, Europe and Britain loosened monetary policy in an attempt to boost flagging global growth but ended up spooking investors, who saw the measures as a sign of growing alarm about the global economic slowdown.

Weakness in energy stocks and miners were the main drags on blue chip sentiment as commodity prices fell on demand concerns, with cautious broker comments also weighing on commodity stocks.

Polymetal was off by 1.9 per cent and steelmaker Evraz 1.6 per cent.

Societe Generale said more earnings downgrades could be on the way for the miners and repeated its "underweight" stance on the sector, as the broker fears an expected rebound in China activity will fail to materialise.

Downgrades in ratings by Morgan Stanley, in a review of European Business Services groups, weighed on two of the biggest individual blue chip fallers - plumbing supplies firm Wolseley and testing equipment group Intertek - which lost 1.5 per cent and 1.4 per cent respectively.

Among banks RBS was the biggest faller with a retreat of 1.9 per cent while Lloyds was flat. Barclays nudged down by 0.8 per cent as it continued to be hit by the Libor rate fixing scandal. Ratings agencies including Moody's have warned the bank of a possible downgrade.

Broker comment had a positive impact for some blue chips, with insurer Aviva, the top FTSE 100 gainer. It was up 3.2 per cent - helped by an upgrade in rating from Societe Generale to "hold" from "sell".

In the same sector Old Mutual lifted by 0.9 per cent.

Security giant G4S was up 1.5 per cent and InterContinetal Hotels Group 0.9 per cent.

In Asia the Nikkei closed down 0.6 per cent and the Hang Seng was flat.

Meanwhile on a visit to Tokyo International Monetary Fund head Christine Lagarde concern at a deterioration in the global economy, saying the outlook has become more worrying as developed and big emerging nations show signs of slowing down.

US non farms payroll data - seen as key indicator of the state of the recovery in the US - is due out later.

Meanwhile British factory gate inflation eased in June as lower oil prices pushed input costs down at the fastest annual pace since September 2009, data showed.

The Office for National Statistics said producer output prices rose 2.3 per cent on the year, the lowest inflation rate since October 2009, and below forecasts for a 2.4 per cent rise.