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LONDON (Thomson Financial) - UK blue chips opened lower on Friday after a 200-point drop overnight by the DJIA, in reaction to disappointing U.S. GDP data and ahead of today's key jobs report, with British Energy the top faller after EDF walked away from a bid.
At 9:14 a.m., the FTSE 100 index was 26.8 points weaker at 5,385.1, after closing 8.8 points lower Thursday at 5,411.9.
The FTSE 250 index was down 27.8 points at 8,828.9.
Overnight on Wall Street, the DJIA closed 205.67 points weaker at 11,378.02, while the broader S&P 500 index fell 16.88 points to 1,267.38, and the Nasdaq Composite lost 4.17 points at 2,325.55.
Asian markets were also lower today, with Japan's Nikkei 225 index closing down 282.22 points at 13,094.59, while Hong Kong's Hang Seng ended 131.50 points lower at 22,862.60
Meanwhile oil prices in Asian trade fell further back towards $123 a barrel on Friday, as sluggish U.S. economic data prompted fund selling on fears of eroding demand in the world's top energy user.
All eyes Friday will be on the release of key U.S. July payroll numbers.
This month the U.S. economy is expected to have lost 72,000 jobs, following a 62,000 cut in June, with the unemployment rate expected to have increased to 5.6 per cent in July, up from 5.5 per cent in June.
U.S. average hourly earnings are expected to have increased by 0.3 per cent in July, the same rate of change as the previous month.
In other U.S. data due Friday, North American construction spending is expected to have dipped by 0.4 per cent, the same decline as the previous month.
And the U.S. Institute of Supply Management's Manufacturing index is expected to have dipped to 49.2 from 50.2.
In London, on the corporate front, British Energy shares topped the FTSE 100 fallers board, down 5 percent in value with a 36-1/2 pence drop to 693 after the firm said it had not agreed a takeover agreement with an unidentified suitor, which sources familiar with the matter have said is France's EDF.
The UK company, which owns eight active power stations in the UK, did not say that discussions were at an end but added there was no certainty an offer would be made.
Earlier EDF revealed in a statement released overnight that conditions allowing for a 'major development' in the UK were 'not met'.
The French company made no reference to British Energy but had been widely expected to announce a bid for its UK peer on Friday morning when it released H1 results.
The main drag, however, on blue chip sentiment early Friday was a further drop back by mining stocks as commodity prices retreated once more, with Kazakhmys losing 50 pence at 1,449, Vedanta shedding 62 pence at 1,956, BHP Billiton down 50 pence at 1,643, and Rio Tinto off 147 pence at 5,193.
Elsewhere among the blue chip fallers, Centrica dropped back after Thursday's results, losing 9-1./2 pence at 305-1/4 with JP Morgan downgrading its rating to 'neutral from 'overweight'.
Meanwhile Unilever shares shed 32 pence at 1,356 after ING downgraded its stance on the group's Dutch-listed stock to 'hold' from 'buy' and lowered its price target to 20 euros from 22 as it fears a tough second-half of the year following the firm's second-quarter results on Thursday.
And British Airways shares dipped 3 pence lower to 252-1/4 following a first-quarter trading update today, with Panmure Gordon saying the results were towards the bottom end of forecasts.
BA saw its pretax profit for the three months to the end of June fell to 37 million pounds, compared with 298 million pounds in the same period last year.
But on the upside after results Friday, shares in BAE Systems added 3-3/4 pence at 453-1/4 after Europe's biggest defence company posted a 26 percent rise in first-half earnings on Friday and said its full-year results would benefit from strong demand for armoured wheeled vehicles.
Meanwhile Alliance & Leicester shares firmed 0-1/4 pence at 340-3/4 as investors assessed an expected drop in first-half profits after treasury losses of 143 million pounds and higher funding costs.
The UK's seventh-biggest bank reported core operating profit for the six months to June 30 of 22 million pounds, down from 295 million pounds in the same period last year. Stripping away impairment charges and funding costs, the bank reported a core operating profit of 301 million pounds.
The bank has agreed to a 317 pence per share takeover from Spain's Banco Santander, the owner of Abbey National, with the transaction expected to complete in October 2008.
Among other banking blue chips, HBOS shares gained 6-3/4 pence at 297-1/4 in a further reaction to Thursday's first-half results which saw write-downs at the group come in less than expected.
Kingfisher was the top FTSE 100 gainer, however, up 5 pence to 123.4 Kingfisher, Europe's biggest home improvement retailer, said Friday, it has moved to cut its 1.5 billion pounds debt burden by agreeing to sell its 31-store Castorama Italy business to Groupe Adeo SA, the privately owned French DIY group, for 560 million euros.
In reaction, Landsbanki said it looked a very good price for a business where recent sales trends have been weak.
On the second line, Trinity Mirror was the top performer, rallying 8-1/4 pence higher at 94-1/2 after both Morgan Stanley and Merrill Lynch raised ratings for the newspaper group.
On the downside, GKN was the biggest mid cap casualty, losing 11 pence at 202-1/4 as the automotive components group fell back in sympathy with sharp falls by European carmakers following bad news from the sector overnight from BMW and for U.S. giant General Motors. tf.TFN-Europe_newsdesk@thomson.com jmh/ak COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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