FTSE falls as broker comment weighs on miners

* FTSE down 0.1 pct

* Miner pare Wednesday's gains, weighed by broker comment

* Autonomy gains on M&A talk

By David Brett

LONDON, Sept 2 (Reuters) - Britain's top share index fell in early trade on Thursday, as investors paused for breath after the previous session's gains, with miners leading declines weighed by downbeat Citigroup comments on precious metal miners.

By 0803 GMT, the FTSE 100 .FTSE was down 4.06 points, or 0.1 percent at 5,362.35, having closed up 2.7 percent at 5,366.41 on Wednesday, its strongest daily performance in almost a month buoyed by strong macro data and M&A speculation.

"We are still very much in a trading range," David Morrison, market strategist at GFT Global said, adding investors are keeping an eye on U.S. markets and the S&P in particular, which is at the peak of its recent trading range.

"If it (the S&P) can break through that (the 1,080 level) then we have every chance of pushing on."

Miners .FTNMX1770, among the best performers on Wednesday after the bullish manufacturing data from China and the U.S., dropped as investors booked profits.

Lonmin (LMI.L) and African Barrick Gold (ABGL.L) were top fallers in the sector, down 1.4 and 2.5 percent respectively, as Citigroup cut both their ratings to "hold" from "buy" arguing precious commodities are set for a subdued second-half 2010.

Precious metals peer Fresnillo (FRES.L) fell 2.5 percent and Hochschild Mining (HOCM.L) shed 2.5 percent as Citigroup downgraded its recommendation on the mid cap miner to "sell" from "hold".

A broker downgrade also weighed on testing equipment firm Intertek Group (ITRK.L), which dropped 1.2 percent with traders citing a Morgan Stanley note in which the broker cut its rating to "underweight" from "equalweight".

UK Chipmaker Arm Holdings (ARM.L) was the top faller on the FTSE 100, down 3.2 percent with JPMorgan Cazenove arguing that U.S. peer Intel's (INTC.O) purchase of Infineon's IFXGN.DE wireless unit is neutral rather than positive for Arm.

Telecoms firm Cable & Wireless Worldwide (CWP.L) and British satellite business Inmarsat (ISA.L) fell 1.7 and 0.6 percent respectively, paring previous session's gains, having been linked with M&A talk on Wednesday.

AUTONOMY NOT ALONE

M&A talk continued to spark investor interest. Britain's biggest software company Autonomy AUTN.L topped the blue chip risers list, up 3.7 percent with traders citing press reports that the software company could find itself at the centre of a takeover battle between Microsoft MSTF.O and Oracle (ORCL.O).

Mid cap Redrow (RDW.L) added 2.6 percent as speculators remained convinced that founder and chairman of the housebuilder Steve Morgan, who owns 29.9 percent of the equity, will soon take the company back into private hands at 495 million pounds, or 160 pence a share, the Daily Mail market report said.

Britain's International Power (IPR.L), which recently agreed to a reverse takeover by France's GDF Suez (GSZ.PA), rose 1.5 percent helped by Deutsche Bank which upgraded its rating to "buy" from "hold".

Defence contractor BAE Systems (BAES.L) climbed 2.3 percent after the firm received a $629 million contract to upgrade 1,700 Caiman MRAP vehicles. [ID:nWNAB2700]

The European Central Bank is set to keep interest rates at a record low of 1 percent, in a decision to be announced at 1145 GMT.

With no important domestic economic data due investors will watch for U.S. data due later, which includes weekly jobless numbers and pending home sales, giving further indications on the strength of the recovery in the world's biggest economy, ahead of the non-farm payrolls on Friday.

"I think traders are going to want to hold off ahead of the Non Farm Payrolls on Friday and the Labor Day weekend in the U.S., making it difficult to build on yesterday's rally in the short term," GFT Global's Morrison said. (Editing by Hans Peters)