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Britain's FTSE slips back after rally

Friday, 12 Oct 2012 | 3:16 AM ET

* FTSE 100 down 0.1 percent after gains Thursday

* Engineers depressed by another profit warning

* Banks higher awaiting results from U.S. peers

By Jon Hopkins

LONDON, Oct 12 (Reuters) - Britain's top shares were lower on Friday, slipping back after a strong rise the previous session as investors' focus turned back to concerns about global growth and corporate earnings.

Engineering firms made up some of the biggest fallers after yet another profit warning from the sector, with mid-cap Morgan Crucible

the latest to voice caution, hot on the heels of Cookson at the start of the week.

Morgan Crucible shares dropped 12.3 percent, topping the FTSE 250

fallers list, after it said its full-year performance was likely to be materially below its previous expectations.

In response, Oriel Securities downgraded its rating for Morgan Crucible to "hold" from "buy"

The bad news weighed on GKN , the top blue chip faller down 3.4 percent, while engineering peers IMI , Melrose , Weir Group and Bodycote all suffered as well.

"Following on from Cookson, it will be a case of spotting the next warning. IMI and Bodycote will top many lists but the lack of a Chinese/Asian exposure will be a plus - much of Morgan and Cookson is the lack of an H2 pick up the region," Oriel said.

At 0810 GMT, the FTSE 100

index was down 7.61 points, or 0.1 percent, at 5,822.13 points, after a fall in U.S. weekly jobless claims enabled the index to gain 0.9 percent on Thursday to snap a run of three consecutive sessions of losses.

"After Thursday's rally, a slip back was always likely on a quiet Friday, with the bounce back mainly having been a short-squeeze in low volume, but it is encouraging that the 5,800 level is holding," said Mike Mason, senior trader at Sucden Financial Private Clients.

Banks

were the strongest blue chip performers, up 0.7 percent, extending the previous session's rally as investors awaited results from both JPMorgan Chase & Co.

and Wells Fargo

, as the U.S. sector's third-quarter reporting season gets under way on Friday.

Financial services firm Hargreaves Lansdown

was the top FTSE 100 gainer, up 2.8 percent as it said its assets under administration increased by 2.2 billion pounds in the three months to Sept. 30 to 28.5 billion pounds.

"We increase our ahead of consensus pre-tax profit forecast by 5 percent this year, our target price is raised to 650 pence from 587 pence. Our recommendation remains 'Hold', only due to the warranted substantial premium valuation," Numis Securities said in a note on Hargreaves Lansdown.

Miners

rose 0.3 percent but remain volatile as investors await China's trade data due at the weekend to gauge the economic health of the world's top metals consumer, with expectations continuing of stimulus measures from the country.

Chilean copper miner Antofagasta

, however, missed out on the sector gains, losing 1.3 percent with traders citing the impact of a downgrade to the stock by HSBC Securities to "underweight".

Technical analysis of the FTSE 100 remained cautious.

"Based on the short-term range of 5,885.60 to 5,766.69, traders should watch for a rally to 5,826.15-5,840.18 to attract fresh selling pressure. If the market does turn lower after testing this zone then look for the start of a steep break," said James A. Hyerczyk, analyst at Autochartist.

(Editing by Hugh Lawson)

((jon.hopkins@thomsonreuters.com)(02075428954)(Reuters

Messaging: jon.hopkins.thomsonreuters.com@reuters.net))

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