Centrica's British Gas to cut 500 jobs to rein in costs

(Updates throughout)

LONDON, Feb 2 (Reuters) - Britain's largest energy supplier, British Gas, said on Tuesday it would cut around 500 jobs, the first as part of a plan by parent company Centrica (LSE: CNA.L - news) to shed 6,000.

"British Gas is well positioned to grow, but we must ensure that our costs allow us to be competitive for our customers," said Mark Hodges, chief executive of UK energy supply at British Gas.

Labour union GMB, which was informed by British Gas because it represents some of its employees, said the cuts were related to the closure of British Gas' insulation business.

Centrica announced plans last year to shed 6,000 jobs, as well as to create 2,000 roles in new business areas, with a view to saving around 750 million pounds a year by 2020.

Utility Centrica is facing a tough business environment amid weak energy prices, low demand and strong competition for customers from smaller energy suppliers. (Reporting by Karolin Schaps; additional reporting by Sarah McFarlane; Editing by Mark Potter and Alexander Smith)