FTSE Ends 1.3 Pct Lower; Commods, Insurers Weigh

By the close, the FTSE 100 was 54.84 points lower at 4,134.75, near session lows after a late sell-off.

Britain's leading share index ended 1.3 percent lower on Monday, with the grim economic backdrop pressurising heavyweight commodity stocks, while insurers fell on funding concerns prompted by bank losses.

By the close, the FTSE 100 was 54.84 points lower at 4,134.75, near session lows after a late sell-off. The UK blue chip index ended down 0.3 percent on Friday.

Volumes were very thin in London with U.S. markets closed Monday for President's Day and schools half-term weighing.

"The closure of U.S. markets has drained all interest in London, with thin volumes exacerbating the declines," said Chris Bennett, senior trader at binary betting firm Choice Odds.

"And given that it's half-term as well, there are few reasons to be getting involved in the market this week."

Legal & General was the biggest FTSE faller, down 10.5 percent after the Financial Times said at the weekend that the insurer was in talks with the FSA about the amount of money it should set aside to cover defaults in its bond portfolio.

L&G said it was not involved in any talks with regulators beyond routine discussions in the run-up to its full-year results.

Other insurers were also under pressure, with Prudential down 8 percent, and Aviva off 7 percent.

"Worries about capital adequacy picked up speed after the Lloyds announcement, and the market is convinced they (L&G) are going to come to the market with a rights issue," said Jim Wood-Smith, head of research at Williams de Broe.

Lloyds Banking Group lost more than 32 percent on Friday after the lender said its HBOS unit made a pre-tax loss of 8.5 billion pounds ($12.28 billion), reviving concerns it could need more state funds or be nationalised.

After a volatile session, Lloyds shares shed another 8.1 percent Monday impacted by a Moody's debt downgrade and a cut in stance by Citigroup to "hold" from "buy".

Among other banks, Royal Bank of Scotland shed 6.4 percent, Barclays lost 3.4 percent, and Standard Chartered fell 1.4 percent.

DIRE DATA DENTS MINERS

Domestic and international data highlighting the harsh economic climate added to bearish investor sentiment.

Britain will fall into a deeper economic recession than previously thought, the Confederation of British Industry said, as tight credit conditions and a global downturn weigh down on companies.

Property website Rightmove said asking prices of properties in England and Wales were a record 9.1 percent lower in February than last year, but prices were 1.2 percent up on the month.

And Japan sunk deeper into recession with its worst quarterly contraction in 35 years.

The dire economic outlook further dented metals prices which hit miners, with Kazakhmys, BHP Billiton, and Xstrata falling between 1.2 percent and 4.0 percent.

Rio Tinto lost 3 percent after the mining giant said it is confident the Australian government will approve its $19.5 billion tie-up with Chinese state-owned aluminium-maker Chinalco, Rio's strategy chief said on Sunday.

Energy stocks also retreated with crude falling back to $37 a barrel. Royal Dutch Shell, BP, and Tullow Oil were down between 0.9 percent and 2.3 percent.

Defensive stocks were the main blue chip gainers as investors sought safety in companies seen as well-placed to endure the hostile economic climate.

Drugs group Shire, which reports results later this week, added 1.6 percent, food producer Associated British Foods gained 1.4 percent, and outsourcing firm Capita took on 1.6 percent.