Britain's FTSE dips as trade war fears loom, focus on May's Brexit speech

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* FTSE down 0.6 pct

* Focus on May's Brexit speech around 1330 GMT

* GKN (Frankfurt: 694194 - news) eyes sale of auto unit

By Julien Ponthus

LONDON, March 2 (Reuters) - UK shares traded lower on Friday morning as concerns over U.S. protectionism fuelled by President Donald Trump's promise to tax aluminium and steel imports sent jitters across stock markets worldwide.

At 0930 GMT, the FTSE was down 0.6 percent at 7,135 points as investors also waited for British Prime Minister Theresa May to lay out her vision for Brexit and address concerns both from the EU and her own conservative allies over the Irish border and trade.

"It is to be hoped that the UK government will finally take back the initiative," said Michael Hewson, an analyst at CMC (Shanghai: 600327.SS - news) Markets, adding that expectations were, however, "fairly low".

Any reaction in sterling is likely to have an impact on British shares.

The pound's slow recovery since the June 2016 Brexit vote has given an accounting boost to UK blue chips with revenue in dollars. A weak pound typically supports the FTSE while its rise usually puts a drag on the index.

London-listed steel producer Evraz (LSE: EVR.L - news) was down 2.8 percent, as fears of rising U.S. protectionism and an escalating trade war with Asia hit the share prices of European steelmakers after sending their Asian peers down overnight.

Rentokil rebounded after falling during the previous session on disappointing 2017 results. The British business services group led the FTSE with a 3.7 percent rise.

Shire (Xetra: S7E.DE - news) shares were in second position, up 1.8 percent as speculation over a possible offer for the biopharmaceutical group had already boosted its shares on Thursday.

London Stock Exchange Group fell 3.2 percent after reporting its 2017 results as traders noted higher costs.

Spire Healthcare Group, Britain's second-largest healthcare firm, edged down 0.3 percent after reporting a 7.4 percent drop in 2017 core earnings, hurt by weakness in its business linked to NHS online referrals, and announcing that its chief financial officer would step down.

British engineering company GKN was down 1.5 percent. The British engineering group said it was in talks with Dana Incorporated (Frankfurt: 4DH.F - news) over its auto unit, opening up a new front in its battle to fight off a hostile 7 billion pound ($9.6 billion) bid from Melrose Industries (Frankfurt: 27MA.F - news) . (Writing by Julien Ponthus; Editing by Kevin Liffey)