(Sharecast News) - London stocks were still in the red by midday on Friday as weak US data raised fears about the economy, and ahead of the release of the all-important non-farm payrolls report.
The FTSE 100 was down 0.6% at 8,236.71.
Russ Mould, investment director at AJ Bell, said: "So much for the big equity rally when interest rate cuts take centre stage.
"Investors thought rates cuts - which have just happened in the UK and looked poised to take place next month in the US - would energise stock markets. The opposite has happened with a bad day on Thursday and weakness extending into Friday, meaning August is so far off to a bad start.
"Weak economic data from the US spooked the market and reminded investors there are negative reasons why central banks might cut rates, not simply lowering the cost of borrowing because the rate of inflation is easing.
"An economy going through a bad patch is one catalyst for a central bank to cut rates and hopefully stimulate activity. This thought process is likely to be at the top of the agenda for the Fed this week after shocking US economic data that featured bigger than expected jobless claims and contraction in manufacturing. The narrative has changed from rate cuts equating to good news to rate cuts meaning measures to avoid recession."
The weak economic data in question were the jobless claims figures and ISM manufacturing released on Thursday.
The payrolls report for July is due at 1330 BST, along with the unemployment rate and average earnings.
Joshua Mahony, chief market analyst at Scope Markets, said Thursday's data "puts a huge amount of emphasis on today's jobs report, with any particular weakness likely to raise calls for a 50-basis point cut by the Fed in September".
In equity markets, IAG flew higher after the BA and Iberia owner said it would start paying dividends again, posted a rise in first-half profits and abandoned its pursuit of Air Europa.
GSK rose as it said the US Food and Drug Administration has approved its Jemperli treatment in combination with chemotherapy and then use on its own for adult patients with primary advanced or recurrent endometrial cancer.
NCC surged after it announced the sale of its non-core Fox Crypto business for around €77m (£65.4m).
Capita tumbled despite saying it swung to a profit of £60m in the first half from a loss of £67.9m in the same period a year earlier, and backing its full-year expectations.
Market Movers
FTSE 100 (UKX) 8,236.71 -0.56%
FTSE 250 (MCX) 21,108.24 -1.64%
techMARK (TASX) 4,816.49 -0.16%
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 171.30p 7.06%
Haleon (HLN) 364.60p 1.84%
GSK (GSK) 1,552.50p 1.74%
National Grid (NG.) 996.60p 1.69%
Fresnillo (FRES) 598.00p 1.10%
SEGRO (SGRO) 931.60p 0.82%
Unilever (ULVR) 4,819.00p 0.77%
Reckitt Benckiser Group (RKT) 4,127.00p 0.71%
United Utilities Group (UU.) 1,040.00p 0.68%
AstraZeneca (AZN) 12,586.00p 0.59%
FTSE 100 - Fallers
Pershing Square Holdings Ltd NPV (PSH) 3,612.00p -4.85%
Melrose Industries (MRO) 493.40p -4.19%
Mondi (MNDI) 1,477.00p -4.18%
Intermediate Capital Group (ICG) 2,046.00p -4.03%
Vistry Group (VTY) 1,316.00p -4.01%
Scottish Mortgage Inv Trust (SMT) 822.20p -3.45%
Ashtead Group (AHT) 5,272.00p -3.41%
Schroders (SDR) 343.20p -3.21%
3i Group (III) 2,995.00p -3.14%
IMI (IMI) 1,773.00p -3.11%
FTSE 250 - Risers
NCC Group (NCC) 159.00p 9.66%
Endeavour Mining (EDV) 1,696.00p 2.23%
Centamin (DI) (CEY) 125.20p 1.62%
Hochschild Mining (HOC) 183.80p 1.32%
Johnson Matthey (JMAT) 1,620.00p 1.06%
Safestore Holdings (SAFE) 826.00p 0.92%
Sequoia Economic Infrastructure Income Fund Limited (SEQI) 83.00p 0.73%
Empiric Student Property (ESP) 98.00p 0.72%
Drax Group (DRX) 649.00p 0.70%
Indivior (INDV) 1,063.00p 0.57%
FTSE 250 - Fallers
Baillie Gifford Japan Trust (BGFD) 706.00p -6.12%
Wizz Air Holdings (WIZZ) 1,404.00p -5.14%
Allianz Technology Trust (ATT) 354.50p -5.09%
JPMorgan Japanese Inv Trust (JFJ) 524.00p -4.73%
HGCapital Trust (HGT) 525.00p -4.20%
Future (FUTR) 1,077.00p -3.84%
Ocado Group (OCDO) 386.80p -3.76%
Alpha Group International (ALPH) 2,465.00p -3.71%
Carnival (CCL) 1,116.50p -3.71%
CMC Markets (CMCX) 319.00p -3.63%