* FTSE down 0.6 pct, touches six-yr low
* Energy stocks gain on firmer crude prices
* Aviva under pressure on concerns over capital strength
* Investors eye U.S. payrolls data
By Simon Falush
LONDON, March 6 (Reuters) - Britain's top share index fell
0.5 percent by midday on Friday ahead of U.S. jobs data, as
weakness in banks and insurers offset gains in heavyweight
commodity stocks.
By 1135 GMT the FTSE 100 <> was down 17.79 points at
3,512.07, after tumbling 3.2 percent on Thursday. It touched a
six-year low of 3492.10 earlier in the session.
The UK benchmark index is down nearly 21 percent so far this
year after sliding more than 31 percent in 2008 and is hovering
just above a six-year low set earlier in the week.
Trade was light and choppy ahead of key U.S. employment data
due at 1330 GMT.
"Volumes are light and all eyes are on non-farm payrolls.
People are clearing positions ahead of the data," said Gary
Thomson, head of sales trading at CMC Markets.
Economists polled by Reuters expect the report will show the
world's largest economy shed 648,000 jobs in February and that
the unemployment rate rose to 7.9 percent.
Aviva <AV.L> shed 7.9 percent, extending the previous
session's 33 percent drop as analysts cited concerns over the
group's capital strength.
Friends Provident <FP.L> was the top loser on the index,
down 14.5 percent while Old Mutual <OML.L>, Standard Life <SL.L>
and Prudential <PRU.L> all sank between 4.6 and 8.8 percent.
Banks were broadly lower, but Lloyds Banking Group <LLOY.L>
gained 5.2 percent after it said late on Thursday that talks
between the bank and the British government over the bank's
participation in the toxic asset insurance scheme are still
ongoing. []
HSBC <HSBA.L>, Barclays <BARC.L> and Royal Bank of Scotland
<RBS.L> and Standard Chartered <STAN.L> fell 1.8 to 5.6 percent.
"There's an issue about the amount of capital available for
Aviva which has spooked the market and the banks have become an
easy target," Thomson at CMC said.
COMMODITIES FIRMER
Energy stocks rebounded on firmer crude prices <CLc1>. Royal
Dutch Shell <RDSa.L> and Tullow Oil <TLW.L> put on 0.5 percent
to 1.1 percent.
Higher base metal and gold prices also lifted mining stocks,
with BHP Billiton <BLT.L>, Rio Tinto <RIO.L>, Anglo American
<AAL.L>, Rangold <RRS.L> and Eurasian Natural Resources <ENRC.L>
up between 0.5 percent and 4.1 percent.
BT Group <BT.L> fell 6.5 percent after Morgan Stanley
downgraded the stock to "underweight" and ING trimmed its price
target on the fixed-line operator. Morgan Stanley suggested the
group may cut the final dividend to pay increased top-ups to its
pension.
Wolseley <WOS.L> shed 6.9 percent after the building
materials group said it would raise over 1 billion pounds by
placing shares with institutional investors and through an
11-for-five rights issue.
Morgan Stanley forecast UK corporate profits will fall 60
percent peak-to-trough over 2008 and 2009 and assumes no growth
in 2010.
"While this sounds a rather draconian and hyperbolic
downgrade, we believe it is realistic and incorporates the big
losses that have come to light in the banking sector as well as
a sharp drop in commodity prices," the broker said in a note.
It added that it had revised its 12-month target for the
FTSE 100 to 3,500 from its previous target of 4,300.
WPP Group <WPP.L> put on 5.3 percent after the world's
second biggest advertising group posted 2008 like-for-like
revenue growth of 2.7 percent slightly missing targets, and
revised its 2009 forecasts down to a drop of 2 percent.
(Additional reporting by Dominic Lau; Editing by Greg Mahlich)
