* FTSE down 1.2 percent
* Banks weak on global economic woes
* Sainsbury knocked by Deutsche Bank downgrade
* Weak copper and crude weighs on commodities
By Simon Falush
LONDON, Sept 5 (Reuters) - Britain's FTSE 100 <> was
set for its biggest weekly fall in over six years on Friday, as
jitters about the global economy hit the struggling bank sector,
while falling metal and oil prices pulled commodities lower.
By 1103 GMT, the UK's blue-chip index was 68.3 points lower
at 5,294.0, bringing losses for the week to around 6 percent --
the biggest such fall since July 2002.
Escalating worries about the health of the global economy
were compounded on Thursday with two reports on the U.S. labour
market, ahead of the closely watched non-farm payrolls report
due at 1230 GMT.
"Analysts are expecting a loss of 75,000 jobs. After
studying the economic reports we believe that number is too
optimistic," said David Evans, market analyst at BetOnMarkets.
"If the employment data comes out soft, watch for the FTSE
and all the other major stock exchanges to finish the day deep
in the red."
UK banks were the biggest losers by midday, with comments
from European Central Bank President Jean-Claude Trichet on
Thursday adding to fears about the ability of the financial
sector to weather the slowdown.
"Banks are still responding to the negative comments from
the ECB and there are nerves about funding going forward," said
Keith Bowman, an equity analyst at Hargreaves Lansdown
Stockbrokers.
Across the Atlantic, Wall Street suffered its steepest
decline in more than two months overnight on signs of weakness
in the labour market, while Japan's Nikkei <> fell almost 3
percent earlier on Friday.
Barclays <BARC.L>, Royal Bank of Scotland <RBS.L>, Lloyds
TSB <LLOY.L> and HBOS <HBOS.L> shed between 4 and 1.9 percent.
RSA Insurance <RSA.L> was a rare bright spot in the
financials sector, gaining 4.8 percent as traders cited bid
interest from Allianz <ALVG.DE> [].
MINERS SLIDE
Miners took a hit from falling copper prices <MCU3=LX>, with
Rio Tinto <RIO.L> down 3.4 percent and Eurasian <ENRC.L> down
7.7 percent.
Ukrainian iron ore miner Ferrexpo <FXPO.L> dipped 9 percent
and touched a 14-month low as investors worried about the
collapse of Ukraine's governing coalition on Wednesday.
Oil stocks were also pressured by falling crude prices
<CLc1> with oil down to about $106 a barrel, as flagging U.S.
demand and a firm dollar extended crude's losses to 8 percent
this week.
Cairn Energy <CNE.L>, Royal Dutch Shell <RDSa.L>, and Tullow
Oil <TLW.L> fell between 0.9 and 2.1 percent.
J. Sainsbury <SBRY.L> fell 3.2 percent after Deutsche Bank
downgraded its rating to "sell" from "hold".
The broker said: "We believe that the business will be
increasingly competitively hampered by a lack of ability to
aggressively cut costs without impacting the customer
proposition".
Citigroup also made cautious comments on the food retailer's
first-half performance and the prospects for it meeting
full-year guidance in a sector review on Friday.
On the upside, positive broker comment helped Unilever
<ULVR.L> to feature among the small crop of FTSE 100 stocks in
the black. The Anglo-Dutch food and household products group was
up 0.5 percent after UBS hiked its stance to "neutral" from
"sell" following Thursday's appointment of a new chief executive
at the firm.
Pharmaceutical stocks, seen as defensive investments that
perform relatively well when more risky sectors suffer, were the
biggest gainers. GlaxoSmithKline <GSK.L> gained 0.3 percent
while AstraZeneca <AZN.L> was 0.2 percent higher.
(Additional reporting by Jon Hopkins; Editing by Erica
Billingham)
