* FTSE 100 down 0.1 percent, just off two-month highs
* Index looks over-valued vs U.S. payroll forecasts - SocGen
* William Hill slides off record highs after in-line results
By Toni Vorobyova
LONDON, Aug 2 (Reuters) - Britain’s benchmark equity index held steady around two-month highs on Friday after a mixed crop of corporate results and with investors reluctant weigh in before June U.S. jobs data.
Shares in part-nationalised Royal Bank of Scotland fell 5 percent to be one of the biggest drags on the market, with analysts noting weakness in its trading revenues and core operating profit.
By contrast, airline group IAG rallied nearly 5 percent after swinging to profit in the second quarter thanks to early signs of improvement at its Spanish carrier Iberia.
“It has been a bit of a mixed bag (on earnings) but it’s all about expectations. IAG still posted a first half loss, but maybe the worst is over and that’s why you are seeing a move higher. Contrastingly with RBS the worst isn’t over,” said Michael Hewson, analyst at CMC Markets.
The FTSE 100 was down 9.1 points or 0.1 percent at 6,672.84 by 1031 GMT, sipping from a two-month high of 6,696.63.
Heading into midsession, volumes on the FTSE were at just over a third of its 90-day daily average, highlighting investor caution ahead of the 1230 GMT release of U.S. non-farm payrolls.
The United States, the source of about a fifth of revenues for FTSE 100 companies, is expected to have added 184,000 new jobs in June, but strong recent gains in equities mean that recovery is already more than priced in.
Long-term fair value models at Societe Generale suggest that FTSE levels are consistent with more than 300,000 new jobs being added, suggesting the market may struggle to move higher unless the numbers are high.
“We are seeing a little bit of profit-taking ahead of the payrolls. ... I think we would need a 200,000-plus number to get us above 6,700 because a lot of it is already priced in,” said Hewson, citing recent strong U.S. data.
The broader market rally has seen many individual shares hit record highs, making stocks vulnerable at higher valuations.
One such example was William Hill, which hit a fresh record high on Thursday, after rallying more than 50 percent this year, only to slump 7.5 percent after posting in-line results.
“Despite a solid first half, we see a number of headwinds going into the second half,” analysts at Nomura said in a note.
“We continue to believe that the company’s strategy is very sensible ... but we struggle to justify the valuation.”
William Hill trades on 15.6 times expected 2014 earnings, according to Thomson Reuters StarMine, compared to the FTSE 100 average of 11.7 times. (Editing by Louise Ireland)