Britain's FTSE falls as emerging market weakness dents Diageo
* FTSE 100 falls 0.2 pct
* Diageo sales growth slows due to EM weakness
* B Sky B, Shell reassure with company updates
* Fat finger temporarily sees HSBC surge
LONDON, Jan 30 (Reuters) - British blue chip shares fell for the seventh time in eight sessions on Thursday, with consumer stocks hit after drinks group Diageo flagged weakness in emerging markets.
The FTSE 100 index was down 0.2 percent, or 16 points, at 6,528.28 by 1148 GMT, nearing its lowest level since mid-December.
Shares in Diageo skidded 6.5 percent, taking the most points off the FTSE, after the world's biggest distilled spirits company reported slower net sales growth due to weakness in China, Thailand and Nigeria.
Diageo had revealed similar struggles last quarter in markets such as Turkey and Russia.
Peer SABMiller also fell, by 1.6 percent, as other consumer staple stocks dropped on expectations that emerging market turmoil, which impacted earnings in the summer of 2013, would again hit their results.
"Emerging markets are a concern, certainly in the short term. We've been down this road before, however, and there won't be as big a reaction as the global economy is in a good enough shape this time around to take us out of the mire," Mike McCudden, head of derivatives at Interactive Investor, said.
"Companies that do have big exposure to emerging markets, such as Diageo, will be impacted, but as a company it is well placed to get through it."
Social unrest and currency problems in emerging markets such as Thailand, Turkey and Argentina have knocked back global equities this week, accentuated by the U.S. Federal Reserve's decision to trim its stimulus programme further.
However, many investors still expect the FTSE to eventually hit a record 7,000 points in the first quarter, helped by signs of a gradual rebound in the British and world economies.
Among top gainers were B Sky B and Royal Dutch Shell after they delivered reassuring earnings reports, in contrast to Diageo.
Shell's report included proactive steps to improve returns after a profit warning two weeks ago knocked its stock price.
So far this earnings season, 87 percent of companies have beaten or met expectations on the FTSE 100, although some reports had been preceded by profit warnings and Thomson Reuters Starmine calculates that reported earnings were 2.2 percent below expectations.
"I think earnings have been fine. There have been a few minor negative surprises with the profit warnings we've seen, but I think we will see growth come through by the end of the year," McCudden said.
The FTSE 100 rose 14.4 percent in 2013, its best annual gain since 2009, but has struggled to break above its 2013 peaks at the start of 2014.
Hantec Markets analyst Richard Perry said the FTSE was vulnerable to further drops that could push it down to the 6,500 or 6,422 point levels - with 6,422 points marking a low point reached in December.
The index briefly turned positive after HSBC surged 10 percent, in a move traders attributed to human error, known as a "fat finger". The bank, which accounts for 7.5 percent of the index, quickly pared the gains, sending the index back into negative territory.