By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- Miners knocked U.K.'s FTSE 100 index lower on Thursday as the sector was hurt by a slide in iron-ore prices.

The benchmark stock index fell 0.4% to 6,805.80, breaking a two-day winning streak.

Mining firms occupied the top of the decliners' list, with shares of Rio Tinto PLC (RIO) down 3.8%, Anglo American PLC 3.5% lower and BHP Billiton PLC (BHP) off 2.8%.

The losses came after spot iron-ore prices tumbled to a two-year low, according to media reports. The Financial Times reported that prices of the steelmaking ingredient have slumped 35% so far this year, due to slower demand from China and increasing global supplies.

Mining firms are sensitive to the price of iron ore, and many of them are spending billions of dollars to meet an expected rise in demand.

Also falling, shares of Tesco PLC lost 1.2% after Deutsche Bank cut the supermarket chain to hold from buy.

Deutsche Bank further lifted its rating on Wm Morrison Supermarkets PLC to hold from sell, sending the shares 1.4% higher.

Tullow Oil PLC added 1.4% after the oil-exploration company said it has found more oil in Kenya.

Outside the main index in London, shares of online supermarket Ocado Group PLC sank 16% after brokerage firm Redburn cut the online supermarket company to sell from buy.

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