* FTSE down 0.7 percent ahead of U.S. non-farm payrolls
* Energy stocks retreat as crude falls below $70 barrel
* Miners stocks weakened by cheaper metal prices
* Broad retreat; drugmakers, life insurers lose ground
By David Brett
LONDON, July 2 (Reuters) - Britain's top share index was down 0.7 percent at midday on Thursday, as equities fell broadly, led lower by energy and mining stocks which fell on retreating commodity prices ahead of key U.S. payrolls data.
Energy companies, which gained in the previous session tracking higher oil prices, took most points off the index as crude dipped back below $70 per barrel.
BP, Royal Dutch Shell, BG Group and Tullow Oil fell 0.9-1.7 percent.
At 1022 GMT, the blue chip index was 31.66 points lower at 4,390.05, after closing 91.50 points higher on Wednesday at 4,340.71 on the first day of the new quarter.
"Investors looked to profit take from yesterday's rally, with the energy and miners taking the brunt of the selling," said Joshua Raymond, Market Strategist at City Index.
U.S. FOCUS
Traders will be focused on the United States this afternoon, with all the attention on non-farm payrolls data, bought forward a day from Friday this month due to the Independence Day holiday, as investors look for further direction.
Forecasters expected the figure to come in with a fall of 355,000 in June, after May's 345,000 decline, while U.S. unemployment was estimated to rise to 9.6 percent last month, up from 9.4 percent in May.
"I certainly think unemployment will continue to rise over the next few months and maybe into next year, and this will bring its own negative impact on aggregate demand," Batstone-Carr said.
Investors will also have the latest weekly U.S. jobless claims, May factory goods, and revised durable orders numbers to digest on Thursday.
And news out of the latest monthly European Central Bank Committee meeting will also be eyed, though no change is expected to monetary policy with euro zone interest rates already at a record low.
Miners dipped, shedding some of recent gains made on corporate activity speculation, as stocks were hit lower metal prices, with investors unsure over the speed of economic recovery.
Randgold Resources, Eurasian Natural Resources, Anglo American, Lonmin and BHP Billiton fell 1.1-2.5 percent.
Rio Tinto fell 1.8 percent after a $15.2 billion rights offer, the fifth-biggest on record, putting the world's top iron ore miner back into growth mode after a debt-funded purchase of Alcan had brought it to its knees.
The dip in equity prices was broad-based with defensive drugmakers and life insurers also among those well into negative territory.
AstraZeneca, GlaxoSmithKline and Shire fell 0.8 to 1.5 percent while Aviva lost 2.6 percent and Legal & General slipped 0.8 percent.
With little in the way of positive news, the world's biggest spirits group Diageo topped the risers chart, up 2.5 percent, as traders continued to view its decision, announced on Wednesday, to close two Scottish plants as a good move in the current downturn.
Standard Chartered rose 1.3 percent after the Asia-focused bank announced John Peace as its permanent chairman, and UBS upgraded its rating to 'neutral' from 'sell', while hiking its target price to 1,140 pence from 1,000 pence and upping its estimates. (Editing by Dan Lalor)