UPDATE 2-FTSE 100 slides as U.S. payrolls dent Fed rate cut hopes

* FTSE 100, FTSE 250 down 0.7%
* U.S. non-farm payrolls data stronger-than-expected
* SIG warns of lower UK construction activity, drags
housebuilders
* John Menzies slumps after profit warning

(Adds news items, analyst comments, updates share prices)
By Shashwat Awasthi
July 5 (Reuters) - Britain's FTSE 100 fell on Friday as
stronger-than-expected U.S. employment data tempered hopes of an
aggressive interest rate cut by the Federal Reserve and as
heavyweight miners fell due to weakness in China's iron ore
futures.
The FTSE 100 .FTSE shed 0.7% on its worst day in more than
a month, as a drop in homebuilder shares following a weak
trading update from building supplier SIG SHI.L also weighed.
The FTSE 250 .FTMC gave up 0.7%, with sterling sinking to
a six-month low, as the U.S. payrolls compounded pressure from
weak domestic economic data and recent dovish signals from the
Bank of England.
U.S. non-farm payrolls increased by 224,000 jobs last month,
more than the 160,000 jobs forecast by economists, and led
markets to rein in expectations of a hefty, 50 basis point rate
cut this month.
"What these numbers tells us is that the pricing that a July
rate cut is a done deal is anything but," said CMC Markets
analyst Michael Hewson, adding that the European Central Bank's
policy decision would now come into focus.
"If the ECB cuts rates on July 25, it could give cover for
the Fed to do the same the week after, even if the data doesn't
fully support it."
An index of miners .FTNMX8350 suffered its biggest one-day
fall in almost seven months, after China's leading steel
companies formed a group to probe whether "non-market factors"
were causing a record surge in iron ore prices. SIG tumbled nearly 5% as it posted lower like-for-like sales
for the first half of the year and flagged a "marked
deterioration" in UK construction activity this year.
The dour outlook weighed on the shares of homebuilders.
Persimmon PSN.L , which had in the previous session forecast a
drop in revenue as it slowed new home releases, fell 2.4%. Peers
Taylor Wimpey TW.L and Barratt BDEV.L also skidded.
Housebuilders, considered among stocks that most closely
track the state of the UK economy, were also pressured after a
survey showed British businesses had turned gloomier about the
economy amid persisting Brexit worries.
Small-cap aviation servicing company John Menzies MNZS.L
plummeted 10% to a more than 3-year low after it warned of lower
annual profit, mainly due to weak cargo volumes and flight
schedule reductions. Speciality chemicals maker Victrex VCTX.L lost 7% and
electrical engineering firm Spectris SXS.L retreated 5.8%,
after the stocks were slapped with rating downgrades.