(Reuters) - British equities slipped on Friday, with financial sectors such as insurance and lenders leading losses ahead of the U.S. jobs data, due later in the day, which could offer clues on the Federal Reserve's interest rate trajectory for the year. 

The blue-chip FTSE 100 slipped 0.2% as of 1029 GMT but was set for its third straight weekly advance. The more economically-sensitive midcaps dipped 0.5%, hovering near its lowest level in over eight months.

Insurers dropped 2%, with those having a large exposure to the Los Angeles wildfires such Beazley and Hiscox leading losses. Banks lost 0.9%. 

Oil and gas was a bright spot, adding 1.2% as crude prices ticked higher. [O/R]

Investors were mainly focused on the U.S. nonfarm payrolls report, which is expected to show job growth likely slowed to a still-healthy clip in December while the unemployment rate held steady at 4.2%, reinforcing the Fed's cautious approach toward interest rate cuts this year.

Mid-cap stocks have been pressured by a sharp rise in British borrowing costs this week on concerns about high borrowing in Britain and higher taxes on businesses planned by finance minister Rachel Reeves.

Yields on UK government bonds remained elevated on Friday, with the one on the 10-year gilt hovering near its highest level since 2008, while the 30-year stood at its highest level since 1998.

Among individual stocks, Alliance Pharma jumped 38% after it agreed to be acquired by asset management firm DBAY Advisors in an all-cash deal valuing the healthcare group at 349.7 million pounds ($429.6 million).

Chemicals group Croda lost 2.1% after Morgan Stanley downgraded the stock to "equal-weight" rating from "overweight".

(Reporting by Shashwat Chauhan in Bengaluru; Editing by Eileen Soreng)