London - Britain's top share index fell in early trading on Monday, with a sharp decline in mining and energy stocks on the back of a slump in commodity prices putting pressure on the market.
The UK mining index and the oil and gas index fell 1.4 percent and 1.1 percent respectively after copper slumped to a new six-and-a-half-year low following slowing demand in China and a stronger dollar. Some other metals also traded near their multi-year troughs.
Oil prices plunged around 3 percent on a firmer dollar, which generally makes commodities costlier for holders of other currencies, and on growing worries over a global supply surplus.
“People are very pessimistic about the future outlook for demand for commodities. With China's economic growth slowing, there could be more cost cuttings, mergers and softer prices before we see ultimate price lows,” IG analyst Alastair McCaig said.
Shares in Anglo American, BHP Billiton, Glencore, Antofagasta, BG Group and BP fell 1.6 to 3.1 percent.
The blue-chip FTSE 100 index was down 0.5 percent at 6,302.97 points by 09h03 GMT, after recording its best weekly performance in one month last week.
However, security-related stocks outperformed the broader market after Britain planned to boost its anti-terrorism spending by 30 percent. Britain also plans to increase the number of stealth fighter jets it can launch from aircraft carriers over the next decade, finance minister George Osborne said on Sunday.
“There is every likelihood that the defence sector is going to get a larger piece of financing than expected earlier,” IG's McCaig said.
Shares in Rolls Royce, a leading provider of defence aero engines and services, rose 2 percent, the top gainer in the FTSE 100 index, while BAE Systems was up 1.7 percent.
Among mid-cap companies, gambling technology firm Playtech slumped nearly 10 percent after the company said it was terminating its agreement to buy retail forex trading company Plus500 as it was unlikely to obtain approval for the deal from UK's Financial Conduct Authority by December end.
REUTERS