UK stocks slip as Fed comment, U.S. jobs data eyed

Fri Jan 4, 2013 8:09am GMT

LONDON Jan 4 (Reuters) - Britain's top share index edged lower on Friday as caution that the U.S. Federal Reserve may end its asset-buying programme ahead of time soured appetite for shares in the run up to key U.S. jobs data.

At 0807 GMT, the FTSE 100 index was down 8.30 points, or 0.1 percent, at 6,039.04, having closed 0.3 percent higher on Thursday at another 17-month high, extending Tuesday's 2.2 percent surge.

Minutes from the Fed's December policy meeting released after London's close on Thursday showed some voting members of the Federal Open Market Committee were increasingly worried about the potential risks of the Fed's asset purchases on financial markets, even if it looked set to continue an open-ended stimulus programme for now.

The Fed said last month it would keep interest rates near zero until unemployment -- expected to have stayed steady at 7.7 percent in December -- fell at least to 6.5 percent, as long as inflation does not rise above 2.5 percent

U.S. non-farm payrolls, due at 1330 GMT, are seen rising 150,000 in December, after a 146,000 increase in the previous month, with the unemployment rate seen unchanged month-on-month at 7.7 percent.

Cyclical stocks, those most exposed to the vagaries of the global economic cycle such as miners and banks , led the market lower.

"Over the last 25 years, January has been the best month for cyclicals performance. But the key supports for cyclicals are fundamental: valuations are still close to 10 year lows vs. defensives, global lead indicators have turned, and we have yet to see widespread rotation into cyclicals by investors," UBS said in a strategy note. (Reporting by Jon Hopkins; editing by Simon Jessop)

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