FTSE 100 Lags as Wall Street and Oil Prices Rally

The FTSE 100 index edged lower on Friday, despite higher oil prices and a firmer pound, as investors remained cautious ahead of the US jobs report. The benchmark slipped about 0.1% in early trade, broadly matching a subdued session across Europe. Germany's DAX was up 0.1%, France's CAC 40 fell 0.2%, and the pan-European STOXX 600 eased 0.1% to 648.67.

The immediate focus for London investors is August's US employment report, which could shape expectations for the Federal Reserve's September meeting. Consensus forecasts point to a 55,000 increase in nonfarm payrolls after a 23,000 decline in July, with unemployment expected to hold at 4.1%. Fed Governor Christopher Waller's more dovish comments on Thursday had already helped pull bond yields lower and reduced fears of an imminent rate increase.

ING analysts said a payroll gain below 25,000, alongside a benign core inflation reading next week, may be needed to materially delay another rate rise. Sterling also firmed against the dollar, trading around $1.3542 in early dealings, which can create a mild headwind for the FTSE 100.

The oil surge has revived concerns that central banks may have less room to ease policy. Economically sensitive sectors were under pressure in Europe, with chemicals and banks both falling close to 1% in early trading.