* FTSE 100 closes down 0.8 pct at 6,679.18 points
* Market trims losses after U.S. jobs data
* Smith & Nephew rises after forecast-beating results
* Weak UK manufacturing data weighs on FTSE
By Sudip Kar-Gupta
LONDON, Aug 1 Financial stocks underperformed as
Britain's top equity index fell to a three-week low on Friday,
while weak UK manufacturing data also weighed on the market.
The blue-chip FTSE 100 index closed down by 0.8
percent, or 50.93 points, at 6,679.18 points - its worst closing
level since the second week of July.
The FTSE trimmed some of its earlier losses after a slowdown
in U.S. job growth in July and an unexpected rise in the U.S.
unemployment rate pointed to some slack in the labour market
that could give the Federal Reserve room to keep interest rates
low for a while.
But the London stock market remained bogged down in negative
Traders said data on Friday showing that British
manufacturing grew at its slowest pace in a year in July was
keeping investors on the back foot.
"The mode is to sell on any rallies," said Beaufort
Securities sales trader Basil Petrides.
A fall in major financial stocks took the most points off
the FTSE, with the FTSE 350 Banking Index down 1
percent as Royal Bank of Scotland slipped 1.5 percent.
The part-nationalised bank reiterated on Friday that a vote
by Scotland to become independent from the rest of the United
Kingdom could significantly increase its costs.
Investec analyst Ian Gordon cut his rating on RBS to "sell"
from "hold", arguing that RBS still faced pressures from
litigation costs and impairment charges.
Healthcare group Smith & Nephew managed to rise above
the broader market weakness to finish 3.8 percent higher after
posting higher profits and sales that beat the consensus
The FTSE 100 hit a 2014 peak of 6,894.88 points in mid-May,
which marked its highest level since December 1999. Many traders
had expected the FTSE to attain a record high of 7,000 points
but its failure to breach the 6,900 mark so far this year has
led some traders to book profits above the 6,800 level.
Marcus Bullus, trading director at MB Capital, said he could
buy back into the FTSE if the index recovered to rise above its
200-day exponential moving average level. This is currently at
the 6,686 point level and can be used by technical traders as a
sign to buy if an index breaks above that point.
"I don't want to call the bottom here because you could get
burnt badly, but if we see a day or two of buyers moving the
market back higher, I could get back in," said Bullus.
(Additional reporting by Francesco Canepa; Editing by Mark