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FTSE posts worst weekly fall in 6 yrs on growth woe

Reuters - Saturday, September 6

* FTSE 100 slides 2.3 pct for biggest weekly fall in 6 yrs * Weak copper, crude prices weigh on commodity stocks * Banks weak on global growth fears * RSA Insurance rises on talk of bid interest

By Dominic Lau

LONDON, Sept 5 - Britain's top share index ended down 2.3 percent on Friday, registering its biggest weekly fall in six years, as banks and commodity stocks fell on global economic worries after the U.S. jobless rate jumped last month.

Vodafone <VOD.L> was the top-weighted loser, down 4.5 percent after top mobile phone maker Nokia <NOK1V.HE> warned the soft global economy, tough competition and a weak handset portfolio would hit its market share in the third quarter. Nokia shares tumbled nearly 10 percent.

The FTSE 100 <.FTSE> ended down 121.4 points at 5,240.7 for a weekly loss of 7 percent -- the biggest such fall since July 2002. The UK benchmark is down nearly 19 percent so far this year.

"It's surprising how things can change in a few days. Earlier in the week there was talk of the inflation threat receding with crude oil prices falling. Markets were looking a little bit rosy. We were thinking there might be a rally towards the end of the year," said Tim Whitehead, head of portfolio services at Redmayne-Bentley.

"Now things have turned on their heads ... We are in a bear market and these are the bear rallies that we should expect. The best we can hope is for the market to continue to trade in a range between 5,200 and 5,600 which it has been doing in the last few months."

European shares also finished the day sharply lower, while U.S. stocks were down.

Banks were among the standout losers on the FTSE 100, with comments from European Central Bank President Jean-Claude Trichet on Thursday adding to fears about the ability of the financial sector to weather the slowdown.

HSBC <HSBA.L>, Barclays <BARC.L>, Royal Bank of Scotland <RBS.L>, HBOS <HBOS.L>, Lloyds TSB <LLOY.L> and Standard Chartered shed between 1.2 and 3.6 percent.

The U.S. unemployment rate unexpectedly jumped to 6.1 percent in August, the highest in nearly five years, as employers cut payrolls for an eighth straight month and a decline in labour markets accelerated. [ID:nN05415312]

RSA Insurance <RSA.L> was a rare bright spot in the financial sector, rising 2.8 percent as traders cited bid interest from Allianz <ALVG.DE>. Both Allianz and RSA declined to comment.

MINERS FALL, OILS SUPPORT

Mining stocks took a hit from falling copper prices <MCU3=LX>, with Rio Tinto <RIO.L>, BHP Billiton <BLT.L>, Anglo American <AAL.L>, Xstrata <XTA.L> and Eurasian Natural Resources <ENRC.L> shedding 3.2 to 7.6 percent.

Ukrainian iron ore miner Ferrexpo <FXPO.L> slumped 7.1 percent as investors worried about the growing political tensions in Ukraine.

Energy shares sagged along with weaker crude prices <CLc1>. BP <BP.L> dipped 1.2 percent, Royal Dutch Shell <RDSa.L> dropped 2.9 percent and BG Group <BG.L> fell 2.1 percent.

Whitehead, however, said he saw opportunities in picking up a few beaten-down stocks like energy services firm John Wood Group <WG.L>, which added 0.9 percent.

Sainsbury <SBRY.L> lost 3.3 percent after Deutsche Bank downgraded its rating on the supermarket group to "sell" from "hold".

Cadbury <CBRY.L> climbed 2.3 percent on market talk the confectionery group had appointed one of its global advisers, UBS, to sell off its Australian drinks business with analysts valuing the unit at around 600 million pounds. Cadbury declined to comment.

Unilever <ULVR.L> advanced 0.6 percent, extending the previous session's sharp gains after the appointment of a new chief executive. UBS upgraded its rating on the food producer to "neutral" from "sell". (Additional reporting by Simon Falush and Jon Hopkins; Editing by Greg Mahlich)

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