* FTSE 100 up 0.2 percent
* Uncertainty on U.S. employment data; bailout weighs on
financials
* Miners, oils weak with commodity prices
By Simon Falush
LONDON, Oct 3 (Reuters) - Britain's top share index had
edged higher by midday on Friday but worries about the financial
system persisted and investors proved reluctant to take
positions ahead of key U.S. jobs data due later in the session.
By 1037 GMT the FTSE 100 <> was up 10.5 points at
4,880.9 in fairly thin and volatile trading after falling 1.8
percent on Thursday.
Energy stocks were the heaviest weighted losers as crude oil
prices <CLc1> stayed more than $5 lower than the $100 a barrel
level they reached the previous session.
BG Group <BG.L> fell 3.4 percent, Cairn Energy <CNE.L> lost
3.8 percent, while Royal Dutch Shell <RDSa.L> slipped 1.5
percent.
Investors were looking ahead to key U.S. non-farm payrolls
data at 1230 GMT for more clues on the health of the global
economy, with analysts polled by Reuters predicting a 100,000
jobs fall in September. []
"There are worries about the health of the U.S. economy ...
that will persist even if the credit crunch issues ease
slightly," said Jane Strawbridge, senior research analyst at
Christows Stockbrokers in Exeter.
"I don't think the outlook for the UK consumer will improve
any time soon either."
In more grim news for the UK economy, Britain's services
sector contracted in September at its fastest rate since records
began 12 years ago according to data from the Chartered
Institute of Purchasing and Supply/Markit. []
Financial stocks were under pressure with sentiment still
overshadowed by continued strains in the money markets, with
interbank rates remaining high.
Interdealer broker ICAP <IAP.L> fell 1.5 percent and London
Stock Exchange <LSE.L> slid 2.9 percent. Credit Suisse cuts its
rating for the UK bourse operator to "neutral" from
"outperform".
However. recent heavily sold banks gained with HBOS <HBOS.L>
and Lloyds TSB <LLOY.L> adding 7.6 and 4.1 percent respectively
as investors became more confident that a Lloyds takeover will
go through.
Barclays <BARC.L> was up 4.1 pct, while Royal Bank of
Scotland <RBS.L> gained 4.2 percent.
Life assurer Old Mutual <OML.L> added 5.9 percent after it
said its Swedish subsidiary Skandia AB has been ordered to pay
47 million pounds to settle a dispute over Skandia's asset
management arm. []
DARKENING OUTLOOK
Equity investors were nervous as a darkening economic
outlook and continuing uncertainty about the fate of a $700
billion bailout for the U.S. financial industry has kept the UK
blue-chip index close to its lowest level in over three years.
The UK benchmark is down 4.2 percent this week and 25
percent this year.
"There are plenty of reasons for people not to have bets on
the table ahead of the weekend," said Jeremy Batstone-Carr, head
of private client research at Charles Stanley.
"The markets are going to be treacherous, we are close to
two big hurdles, the last of which (the vote on the bailout) is
after markets in Europe close... so it will take a tenacious
investor to make an investment on a day like today."
Mining stocks fell with gold hit by a rising dollar and
platinum near its weakest in almost three years on demand fears,
while base metals like zinc and copper were also lower.
Lonmin <LMI.L> fell 2.7 percent while Kazakhmys <KAZ.L> lost
2.5 percent and Anglo American <AAL.L> fell 1.5 percent.
British Airways <BAY.L> was the biggest percentage loser in
the blue-chip index, down 6.2 percent at nearly half its value
at the start of the year, as investors fret over monthly traffic
statistics due later.
Shares in Imperial Tobacco <IMT.L> fell 0.9 percent after
Citigroup cut its rating to "hold" from "buy".
Shares in Autonomy Corporation <AUTN.L> gained 1.2 percent
after the software group, recently promoted to the blue chip
index, said it expected third-quarter revenue and adjusted
earnings per share to be "significantly ahead" of consensus
expectations.
(Editing by Greg Mahlich)
