By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- The U.K.'s benchmark stock index erased
an earlier gain and finished sharply lower Monday, with oil shares
pulling back and mining companies falling further.
The FTSE 100 closed down 1.9% at 6,182.72, its sixth consecutive
loss and lowest close since June 2013, according to FactSet
data.
An earlier rise for the benchmark was supported by gains among
oil and gas shares as oil prices had been turning positive. But
those moves fell apart, with West Texas Intermediate crude-oil
futures (CLF5) falling below $57 a barrel. Brent crude futures
returned below $62 a barrel.
There was "an element of misplaced optimism in early trade as
(Brent Crude) oil found some buyers at $60/bbl -- this helped to
lead indices higher with many falsely caught long on what was
essentially some profit taking on last week's sell off," offered
Brenda Kelly, chief market strategist at IG, in emailed
comments.
Among oil majors, BP PLC fell 3.2% and Royal Dutch Shell PLC
lost 2.1%.
After ranking at the top of the FTSE 100 earlier Monday, Tullow
Oil PLC shares fell 2.3% and BG Group PLC gave up 2.9%, with the
shares suffering in recent sessions as oil prices have tumbled to
five-year lows due to oversupply concerns.
The oil and gas group last week dropped more than 3%.
The London benchmark also turned lower along with the broader
European market on Monday, with Russian stocks and the ruble
sliding further against the U.S. dollar. Russia's central bank said
Monday it expects a deeper economic contraction if oil prices stay
at the $60-a-barrel level.
Miners BHP Billiton PLC (BHP) and Rio Tinto PLC (RIO) came under
further pressure as the session wore on, down by 3.7% and 2.5%,
respectively. BHP was downgraded at RBC Capital Markets to
underperform from sector-perform.
Separately, Australia on Monday projected iron-ore prices will
trade around $60 a metric ton, much lower than its previous
estimate of $92 a metric ton.
Commodity firms, particularly oil-and-gas companies, are
dividend heavyweights in the U.K., accounting for nearly 13% of
payouts across the market, "so if their profits take a battering,
they will find it harder to grow their dividends," said Justin
Cooper, chief executive of shareholder solutions at Capita Asset
Services, in a report Monday. "We would not expect them to cut
payouts in dollar terms, however."
Meanwhile, shares of BT Group PLC ended up 0.2% as investors
awaited an announcement on whether EE or rival provider O2 will
land an acquisition bid from BT, which wants to return to the
mobile-services market. EE is a joint venture of Deutsche Telekom
AG and Orange SA , and O2 is owned by Telefonica .
Shares of BT rival Sky PLC were down by 4.1%, leading losses on
the FTSE 100.
Last week, the FTSE 100 fell 6.6%, marking the worst week since
August 2011, according to FactSet.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires