Admiral leads UK stocks lower as U.S. jobs awaited

LONDON -

Britain's top share index fell on Friday, retreating after strong gains in the previous session, with corporate news a drag and all eyes on U.S. jobs data.

At 0934 GMT, the FTSE 100 index <.FTSE> was down 5.61 points, or 0.1 percent at 5,856.233, having jumped 1.4 percent on Thursday to lodge its biggest single session gain in four weeks, buoyed by some reassuring corporate earnings and U.S. data.

Friday's blue-chip corporate updates, however, proved mixed.

Admiral Group was the top blue chip faller, shedding 5 percent after the motor insurer issued a weak third-quarter update, with group turnover down 2 percent in the period to 570 million pounds.

Royal Bank of Scotland , meanwhile, saw its early post-results gains reverse, shedding 1.4 percent as the part-nationalised lender reported an increase in third-quarter operating profit but said it may face fines in relation to how it set Libor and other interest rates.

"We are concerned by the slight increase in non-performing loans and lack of visibility for future profits for the taxpayer. The turnaround story at the moment is not credible and RBS has much work to still undertake," said Atif Latif, director of trading at Guardian Stockbrokers.

"On the whole we are not encouraged by these numbers and see better value elsewhere in the sector."

Overall the banking sector <.FTNMX8350> was a drag on blue chip sentiment as investors' risk appetite waned on caution ahead of the U.S. jobs report.

JOBS JOLT

The U.S. data, the last major economic release before the country's Presidential elections on November 6, is forecast to show non-farm payrolls rose 125,000 in October, after a 114,000 increase in September, although the unemployment rate is seen ticking up to 7.9 percent after a fall to 7.8 percent.

"A (jobs) figure which comes in below expectations will not only prove damaging for investors' confidence in the global recovery but could act as sufficient ammunition for the leading presidential candidate to launch an offensive on the failures of the current U.S. president's measures to stimulate growth," said Shavaz Dhalla, Financial Trader at Spreadex.

The knife-edge U.S. election result, both in the Presidential and Congressional polls, is expected to set the direction for financial markets in the near-term, with investors concerned by an approaching "fiscal cliff".

If the new U.S. Congress and the President cannot reach a deficit-reduction deal by the end of the year, it will automatically trigger big spending cuts and tax increases in 2013, and this would hit the still-recovering U.S. economy hard, damaging the fragile global economy recovery.

The latest British data illustrated that fragility.

The Markit/CIPS British Construction Purchasing Managers' Index (PMI) rose to 50.9 from 49.5 in September, just above the 50 line that separates growth from contraction. That is the highest reading since July and better than the forecast 49.1.

However, new orders fell for the fifth straight month - the longest period of decline since the 2008-2009 recession - and firms reduced headcount at the fastest pace since August 2011.

(Reporting by Jon Hopkins/editing by Chris Pizzey, London MPG Desk)