Weaker Vodafone turns FTSE negative

Investors shrugged off a decision from the Bank of England which left interest rates on hold at 0.5 percent and kept the scale of its asset purchase programme unchanged at 200 billion pounds.

The FTSE 100 index <.FTSE> ended down 3.32 points, or 0.1 percent, at 5,526.72, retreating slightly after closing at a fresh 16-month high on Wednesday.

Vodafone was the heaviest drag on the blue-chip index, off 2.2 percent, with downbeat comments from its U.S. mobiles business partner Verizon Communications one factor hitting the mobile phone giant.

Verizon Chief Executive Ivan Seidenberg said on Wednesday Verizon's profit fell more than analysts expected in 2009.

But the blue-chip index clung close to its high since September 2008 set the previous session, with sentiment helped by strong figures from J Sainsbury .

The supermarket group delivered a better-than-expected third-quarter trading update, helping its shares climb 3.2 percent.

"Sainsbury is doing well, and that's helped maintain positive sentiment, but all eyes are on payrolls tomorrow," said James Hughes, strategist at CMC Markets.

The keenly awaited U.S. non-farm payrolls data, due at 1330 GMT on Friday, is forecast to show a loss of 8,000 jobs in December after a surprisingly small total of 11,000 job losses in November.

ENERGY BOOST

Energy stocks were the biggest prop for the index, supported as crude stayed close to $83 per barrel. BG Group , BP Royal Dutch Shell and Tullow Oil gained 0.5-2.5 percent.

But miners were under pressure, retreating after gains on Wednesday, with copper prices falling back after touching a 16-month peak as investors fretted over possible tighter monetary policy in China, the world's top metals consumer.

Xstrata , Antofagasta , Anglo American and BHP Billiton dropped 0.4 to 1.5 percent.

Defensive stocks gained, helping to limit the FTSE 100's losses.

Among pharmaceutical stocks, AstraZeneca rose 1.2 percent after the firm settled a U.S. patent row over Nexium with Israel's Teva Pharmaceuticals , protecting the Anglo-Swedish drugmaker's top-selling heartburn drug from immediate generic competition.

Peer Shire rose 0.3 percent.

Tobacco companies were higher, with British American Tobacco up 0.6 percent, buoyed by a JPMorgan target price hike, and an upgrade to "buy" from Nomura on Wednesday. Imperial Tobacco also put on 0.8 percent.

Drinks firms were also in demand, with Diageo and SABMiller up 0.6 and 0.7 percent.

Plumbing supplies group Wolseley added 3.6 percent, extending Wednesday's advance, boosted by an UBS upgrade to "buy" from "neutral."

Investors will also watch UK producer price data for December on Friday.

(Reporting by Simon Falush; Editing by Rupert Winchester)