FTSE weakens, investors cautious before U.S. jobs data

Fri Mar 7, 2014 4:21am EST

* FTSE 100 down 0.4 percent

* U.S. jobs data watched, 149,000 increase expected

* Aviva bucks weak trend; JPMorgan hikes target

By Tricia Wright

LONDON, March 7 (Reuters) - Britain's top shares fell on Friday with investors expected to avoid strong bets before U.S. jobs data that could sway the near-term direction of the market.

The market has endured a tumultuous week, with tensions over potential conflict in Ukraine sending shares sliding globally on Monday, only to recover their poise in the following session.

While investors have decided that the situation has stabilised somewhat, they are still exercising caution heading into the weekend, mindful also that the U.S. jobs data has the propensity to unleash volatility onto the market.

The FTSE 100 was down 30.11 points, or 0.4 percent, at 6,758.38 points by 0907 GMT.

U.S. hiring probably picked up enough in February to keep the Federal Reserve on track in reducing its monetary stimulus. But the size of the gain is expected to be modest as the economy struggles to break from the grip of severe winter weather.

Non-farm payrolls is seen having increased by 149,000 last month, with the jobless rate holding at a five-year low of 6.6 percent, according to a Reuters survey of economists.

"(The data) might give us a bit of volatility and people have still got one eye on what's going on in (Ukraine) ... Markets made the mistake of going long into (last) weekend and ended up wearing it on Monday morning and I don't think they'd be stupid to make that mistake again," CMC Markets senior market analyst Michael Hewson said.

He reckoned a jobs number under 100,000 could trigger a drop on the FTSE 100, though stressed it was difficult to determine by how much given a confusing market reaction to a soft ADP private-sector jobs report earlier this week which was shrugged off.

Conversely, a figure above 175,000, or even in line with expectations could spur a positive reaction, he said - though tensions over Ukraine will likely keep a cap on any gains.

Mike McCudden, head of derivatives at Interactive Investor, also noted that geopolitical uncertainties are muddying the picture in terms of predicting the market reaction to U.S. data.

"Too many variables," he said. "(Non-farm payrolls are) a non-story unless the number significantly misses target either way," adding that it would take a number a lot higher than 150,000 to hike the market much above current levels.

Traders had reckoned on the index broadly levelling off, around 1 percent shy of the year's high hit in late January, before political and economic concerns in emerging markets took their toll on equities. It has been trapped in a range between around 6,400 to 6,800 since late October.

Aviva bucked the slightly weaker market trend on Friday, up 1.3 percent at 510.5 pence, as JPMorgan hiked its target price on the insurer to 528 pence from 491 pence after the company unveiled robust results in the previous session.