The FTSE 100 was rangebound on Friday morning as traders scaled back their appetite for risk ahead of the US jobs report due out this afternoon.
London's benchmark index was trading far off Thursday's close of 6,532.4 with just 21 points separating its intraday low (6,520) and high (6,541).
"We're seeing a lot of caution in the markets this morning, with European indices and US futures trading relatively flat ahead of the US jobs report," said Market Analyst Craig Erlam from Alpari.
"It's not unusual to see traders more cautious in the hours before the jobs report is released. However, today's report is one of the most hotly anticipated in a long time, coming less than two weeks before the September FOMC meeting, which means we're likely to see even more caution today," Erlam said.
Also limiting the upside for markets this morning was Britain's trade balance which worsened sharply in July as industrial production disappointed, raising doubts that the UK can export its way back to prosperity. The trade deficit in goods - the gap between imports and exports - rose to £9.9bn, approaching the record £10.3bn in April 2012, the Office for National Statistics said.
US data released Thursday threw more weight behind the argument to begin tapering asset purchases at the Fed's next meeting later this month - jobless claims fell more than forecasts, factory orders declined less than expected and the ISM non-manufacturing index smashed estimates.
However, given that the Fed has explicitly called for an improvement in labour-market conditions before it begins to scale back quantitative easing, analysts will be watching the August employment report - due out on later this afternoon - very carefully.
Consensus estimates are for a 180,000 increase in non-farm payrolls last month, up from the 162,000 gain in July. The unemployment rate is expected to remain unchanged at 7.4%, though this has already fallen speedily from 7.9% in January.
The G20 meeting in St Petersburg continues today and will no doubt also be at the back of investors' minds given that the hot topic amongst world leaders is the potential US military intervention in Syria following last month's alleged chemical weapons attack. "With the US senate moving forward on US unification on Syria the outcome of G20 is likely to cause high volatility today," said Financial Sales Trader Alex Conroy from Spreadex.
FTSE 100: Tullow jumps after Norway discovery
Tullow Oil rose strongly after revealing that the Wisting Central exploration well has made the first-ever oil discovery in the 20%-owned Hoop-Maud Basin in the Barents Sea offshore Norway. The oil and gas explorer said the well, which was drilled to a total depth of 905m and a water depth of 373m, had discovered 50m to 60m of net light oil pay in good quality relatively shallow middle to lower Jurassic reservoir rocks.
B&Q and Screwfix owner Kingfisher was in the red early on after Morgan Stanley downgraded the stock ahead of its first-half results due next Wednesday. The US bank cut its rating to 'underweight' but left its 300p target price unchanged. It also downgraded accountancy software group Sage to 'underweight' this morning.
Engineering and project management company AMEC declined despite scoring a contract with TAQA for work on the Tern oil production platform in the North Sea.
Airline group easyJet was continuing to recover after heavy falls on Wednesday following a profit warning from sector peer Ryanair. Improved traffic statistics for FTSE 100-listed easyJet yesterday helped the share price to rebound.
A host of miners were trading lower as risk appetite was scaled back ahead of the US data later on. Anglo American, Fresnillo and Randgold Resources were all in the red this morning. Financials were also down, including Standard Life, Schroders, Prudential and Legal & General.
FTSE 100 - Risers
Tullow Oil (TLW) 1,056.00p +2.23%
Antofagasta (ANTO) 895.50p +1.65%
Meggitt (MGGT) 541.50p +1.59%
Marks & Spencer Group (MKS) 500.50p +1.13%
easyJet (EZJ) 1,249.00p +1.05%
Rexam (REX) 503.00p +0.90%
Barclays (BARC) 298.10p +0.71%
Carnival (CCL) 2,355.00p +0.64%
National Grid (NG.) 743.00p +0.61%
Centrica (CNA) 396.10p +0.58%
FTSE 100 - Fallers
Fresnillo (FRES) 1,245.00p -2.81%
Randgold Resources Ltd. (RRS) 4,959.00p -1.90%
Standard Life (SL.) 334.40p -1.73%
Anglo American (AAL) 1,548.00p -1.46%
Persimmon (PSN) 1,136.00p -1.39%
Schroders (SDR) 2,388.00p -1.28%
ITV (ITV) 172.50p -1.20%
Amec (AMEC) 1,045.00p -1.14%
Prudential (PRU) 1,113.00p -0.98%
Legal & General Group (LGEN) 190.30p -0.94%
FTSE 250 - Risers
Thomas Cook Group (TCG) 146.30p +5.48%
Lancashire Holdings Limited (LRE) 758.50p +2.85%
Homeserve (HSV) 253.00p +2.10%
Perform Group (PER) 499.90p +2.00%
Bwin.party Digital Entertainment (BPTY) 114.00p +1.88%
BH Macro Ltd. EUR Shares (BHME) € 21.00 +1.84%
Essar Energy (ESSR) 135.50p +1.80%
AZ Electronic Materials SA (DI) (AZEM) 318.70p +1.72%
International Personal Finance (IPF) 636.50p +1.68%
ITE Group (ITE) 289.70p +1.61%
FTSE 250 - Fallers
Computacenter (CCC) 520.00p -3.35%
CSR (CSR) 479.00p -3.21%
African Barrick Gold (ABG) 181.60p -2.52%
Supergroup (SGP) 1,197.00p -2.44%
KCOM Group (KCOM) 87.00p -2.19%
Renishaw (RSW) 1,732.00p -2.04%
John Laing Infrastructure Fund Ltd (JLIF) 113.50p -1.99%
Lonmin (LMI) 335.10p -1.96%
National Express Group (NEX) 268.40p -1.94%
Ashmore Group (ASHM) 349.00p -1.83%