Britain's top equity index ended at its lowest closing level in nearly 18 months on Monday as commodity stocks surrendered early gains and fell sharply after a retreat in oil and metals prices. The UK mining index slumped 2.9 percent to its lowest in more than 5 years, while the oil and gas index slipped 2.5 percent to a 4-1/2 year low, mirroring losses in copper, iron ore and oil.
-- Blue-chip FTSE 100 ends 1.9 percent lower
-- Energy, mining stocks sink after early gains
-- MySale Group slumps 53 pct, Carpetright jumps
Crude oil hit a five-year low of nearly $60 a barrel after producer group Opec said it would stick to its decision not to cut output. Copper dropped 1.5 percent on persistent concerns about demand for basic resources mainly in China, the world's top metals consumer.
Oil majors BP, BG Group and Tullow Oil were down 2.3 to 3.2 percent, while bluechip global miners Rio Tinto and BHP Billiton fell 2.5 percent and 3.7 percent respectively. Mid-cap Ukrainian iron ore miner Ferrexpo slumped 11 percent. "Sentiment remains very fragile as investors continue to look at the data from China and question the speed of strength of the economy," Henk Potts, director of global research at Barclays, said, adding China's influence on commodities puts pressure on the London market which has a very strong weighting in terms of oil and mining stocks.
Credit Suisse predicted an extended period of low iron ore prices at close to current levels and cut its earnings estimates for large-cap by 20-25 percent in 2015-16. "With China demand growth expected to remain slow the sector will remain about relative rather than absolute value and may continue to struggle against the broader market in 2015," it said in a research note.
The bluechip FTSE index closed 1.9 percent lower at 6,182.72 points, the lowest closing level since mid-2013. It fell 6.6 percent last week and is down more than 8 percent so far this year after surging 14 percent in 2013. The index has been hit by its heavy weighting in oil stocks. While lower oil prices can support other sectors, there are signs a weakening global economy could hurt demand for oil at a time of already ample supply.
Among other sharp movers, MySale Group, in which Sports Direct has a 4.8 percent stake, sank 53 percent after the company issued a profit warning. Sports Direct is Britain's biggest sporting goods retailer and is majority-owned by founder and Newcastle United soccer club owner Mike Ashley. However, Britain's biggest floor coverings retailer Carpetright rose 14 percent after saying it expected full-year profit to be towards the upper end of market forecasts as trading improved both at home and abroad. BT closed 0.2 percent higher. The telecom firm has entered into exclusive talks with Orange and Deutsche Telekom to buy EE for 12.5 billion pounds ($19.6 billion), opting for the country's biggest mobile operator over rival suitor, Telefonica.'
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