The UK's blue-chip index made a soft start on Friday morning, as investors braced for a US jobs report and digested the latest signs of a deepening downturn in the UK's construction sector.

Borrowing costs eased slightly after a global rout in government bonds had threatened to overshadow Andy Burnham's first days of the parliamentary session and prompted calls for urgent action from his former advisors.

The yield on the UK's 10-year gilt fell further on Friday morning to 5.15 per cent. Pressure on US yields is also easing, after remarks from Federal Reserve Governor Christopher Waller fuelled speculation that the central bank may hold off on hiking interest rates in the near future. The monthly US non-farm payrolls report is closely watched as one of the Fed's key gauges of labour market strength, and shifts in rate expectations have rippled through global bond markets in recent weeks.

S&P Global's UK Construction PMI Index fell to 44.3 in August, down from 44.7 the month before, driven by a sharp downturn in housebuilding activity. A reading below 50 signals contraction, and August marked the sector's continued decline as higher borrowing costs and weak buyer demand weigh on new residential work. The UK's listed housebuilders have issued profit warnings and cut completion targets in recent months, while urging the government to stimulate demand among first-time buyers.

Kelly Boorman, head of construction at audit firm RSM UK, said that "concerns over demand for private residential activity continue to weigh on sentiment". She added: "Further government initiatives to help boost private residential demand, such as first-time buyer incentives, would therefore be welcome by the sector, and could go a long way to easing some of the pressures faced by housebuilders."

Oil prices held steady on Friday morning. Brent crude — the international benchmark for oil prices — shed about 0.2 per cent but remained above $95 per barrel. Oil prices are on track to gain eight per cent this week as investors reacted to a fresh volley of strikes between the US and Iran. Elevated energy costs feed into inflation measures that central banks monitor, adding another variable to the interest rate outlook.

City AM's FTSE 100 liveblog is tracking the latest market updates and analysis throughout the day.

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Source: City AM