Britain's FTSE 100 index fell for the fourth session in a row on Monday, as weakness in heavyweight commodity stocks eclipsed gains in banks. The UK benchmark closed down 22.35 points or 0.5 percent at 4,426.19, after losing 1.3 percent on Friday.
The blue chip index fell more than 31 percent last year as equity markets world-wide suffered from concerns of a deep global recession. Oil producers were the top-weighted losers, followed by miners, as crude and metals prices fell on worries that weaker growth would crimp demand. BP, Royal Dutch Shell, BG Group and Tullow Oil shed between 0.8 and 3.8 percent.
In the mining sector there were losses of as much as 8.8 percent among Antofagasta, Eurasia Natural Resources, BHP Billiton, Rangold Resources and Vedanta Resources. A downgrade to "hold" from "buy" from RBS also took a toll on Antofagasta.
Manus Cranny at MF Global Spreads said it could be difficult for the market to make headway this week because of the prospect of disappointing company results. "(Corporate) earnings are going to give everybody a stark reality check," Cranny said, though things might pick up later in the quarter. "The input of lower interest rates, lower oil prices ... will begin to feed into the system."
Banks offered support to the index, with the FTSE 350 banks index up 2.4 percent. Royal Bank of Scotland advanced 3.6 percent to 55p after the Sunday Times said private equity firms Apollo Management and BC Partners had joined with former Norwich Union boss Patrick Snowball to mount a late bid for the bank's insurance division. HSBC, Barclays, Lloyds TSB, HBOS and Standard Chartered rose between 1.1 and 7 percent.
Prime Minister Gordon Brown pledged to spend 500 million pounds ($754 million) to stem rising unemployment caused by the financial crisis. Across the Atlantic, President-elect Barack Obama asked President George W. Bush to request the $350 billion funds remaining in the financial rescue package, the White House said.
Man Group dropped 5.6 percent to 230p after Citigroup cut its rating on the hedge fund to "sell" from "hold" and cut its target price ahead of a trading update this week. Also in the financial sector, private equity group 3i slipped 4.7 percent after Morgan Stanley cut the stock to "equal-weight" from "overweight", citing de-gearing risk. Tesco, the world's third biggest retailer, was down 3.5 percent at 350.3p ahead of its trading update. Also in the retail sector there were falls of around 2 percent in Sainsbury, Marks & Spencer, Next and Morrison Supermarkets.
J.P. Morgan said in a note that investors had largely expected the fourth-quarter earnings from European companies to be bad, but there was still scope to surprise on the downside. "The current market backdrop should be described as a "buying the dips" phase and we would use potential 5 to 10 percent equity rollover into the earnings season as an opportunity to add further to stocks," the investment bank said.