Britain's leading share index ticked lower on Friday, consolidating after strong gains in the previous session, with a strong take-up for Greece's bond swap deal discounted as investors sought fresh direction from key U.S. jobs data.
U.S. February nonfarm payrolls, due at 1330 GMT, are forecast to have risen 210,000 in February, after a 243,000 increase in the previous month, with the jobless rate seen steady at 8.3%.
However, after recent above-forecast U.S. private payrolls data, some commentators believe the official payrolls number could comfortably beat expectations too, which could limit the likely upside potential from good numbers.
Balancing this, Greece said on Friday that 85.8% of private creditors had accepted its bond swap offer and that the rate would reach 95.7% with the use of collective action clauses to enforce the deal, a move which will trigger a second debt bail-out and avoid a messy default.
At 0912 GMT, the FTSE 100 index was down 0.78 points, or 0.1% at 5,858.95, having jumped 1.2% on Thursday.
Diversified pharmaceuticals provided the main underlying strength for the FTSE, led by Shire up 1.00%, supported by an upgrade in sector rating by UBS.
The broker upped its rating for pharmaceuticals to "overweight" in a European equity strategy review, pointing out that the sector's P/E has de-rated relative to the market.
Overall, however, UBS sees risk of some near-term consolidation in the European equity market, given the near one-third re-rating of the P/E multiple since October; some signs that the improvement in PMIs is leveling off; and some tactical indicators are close to extremes.
Reflecting this, the broker downgraded its rating for metals & mining, noting that the sector has been the second-biggest re-rater of the 30 European sectors, with its price/earnings (P/E) multiple up 64% since October.
"We downgrade the metals & mining sector to neutral. The macro backdrop now appears less supportive and there are some signs of slowing steel demand in China," UBS said in a note.
Miners were among the biggest FTSE 100 fallers, reversing some of the strong rally seen in the past two sessions as the UBS downgrade countered the benefits of a rise in copper prices, helped by some supportive Chinese data.
China's annual inflation cooled surprisingly sharply to a 20-month low of 3.2% in February, well below its 2012 target of 4%.
"We would suggest that the inflation bubble in China last year is well and truly burst, and so policy easing can accelerate. This would be beneficial for the likes of miners and other emerging market related stocks," said Gerard Lane, equity strategist at Shire Capital.
FRESNILLO FALLS
Fresnillo was the top FTSE 100 faller, down 3.8% as Deutsche Bank downgraded its rating for the Mexican silver miner to "hold" from "buy", trimming its target by 3%, on valuation grounds after recent results.
Negative broker comment also weighed on medical products group Smith & Nephew, down 1.6% as Goldman Sachs cut its rating to "neutral" from "buy".
Brewer SABMiller was also a blue chip faller, losing 0.8%, impacted by news its newly acquired Foster's business had lost a licence to import and distribute Corona Extra lager in Australia.
On the upside, Old Mutual was a big blue chip gainer, up 1.4%, as the Anglo-South African insurer posted a 17% increase in 2011 earnings, which were lifted by cost cuts and strong growth at majority-owned South African lender Nedbank.
