* FTSE 100 down 1.6 pct
* Longs falter ahead of U.S. non-farm payrolls
* Technicals support move; AstraZeneca among top fallers
By Simon Jessop
LONDON, Sept 2 (Reuters) - Britain's leading share index fell on Friday to snap a three-day rally in a technical correction ahead of U.S. jobs data, led by AstraZeneca after its Crestor drug failed a key test.
Recession fears fuelled the bearish tone, with overnight falls in the United States and Asia ahead of U.S. non-farm payrolls data that is expected to show growth in the world's largest economy continuing to slow.
Low volumes in Asia ahead of the number -- due out at 1330 GMT -- reflected a degree of uncertainty and market unwillingness to maintain more aggressive long positions, or take on extra risk ahead of the long U.S. holiday weekend.
The concern was "encouraging traders to take money off the table in the short term", Cameron Peacock, market analyst at IG Markets said, while Jonathan Sudaria, night dealer at Capital Spreads said recent readings had added to the cautious mood.
While pre-data positioning "is always an uncertain prospect, given how wide of the mark actual data releases have been compared to their forecasts recently, traders will be looking to lighten up on risk going into this number."
Jordan Lambert, trader at Spreadex, agreed, citing a "strong possibility the figure could be even more dire" than the 75,000 reading expected, especially after a weak ADP jobs report this week, which could see markets "fall sharply".
After closing Thursday up half a percent, the FTSE 100 was down 1.6 percent at 5,329.50 points by 0806 GMT on Friday. It remains up 4 percent on the week, on course for its best week in nine, albeit after a weak August that saw it lose more than 7 percent.
TECHNICAL TARGET
Among the worst-hit stocks in early trading was AstraZeneca, down 3.5 percent after its Crestor drug failed to beat a rival drug in a study, while banks including Royal Bank of Scotland also led fallers, giving back some of their gains after the recent index rally.
Taking most points off the index was oil major BP , down 3 percent in volume almost a third of its daily average after less than an hour of trade, as it and other major U.S. Gulf of Mexico producers prepare for a possible storm.
Among major deal news, the London Stock Exchange announced talks to buy clearing house LCH.Clearnet, potentially stealing a march on rivals including Nasdaq OMX .
Technically, the early fall was also justified as the "intraday charts are indicating an overbought condition," James A. Hyerczyk, Analyst at Autochartist wrote in a note.
"On the 30-minute chart, for instance, the FTSE broke through the support line of a channel up chart pattern, suggesting the start of a near-term break."
Based on the short-term range of 5102.06 to 5449.67, Hyerczyk called the first potential downside target for market bears as 5275.87 to 5234.85, based on the rally from 4791.01 to 5449.67. (Graphic by Vincent Flasseur;Editing by Erica Billingham)
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