FTSE ends down

Britain's benchmark index ended lower yesterday as falling metal and oil prices dragged on heavyweight commodity stocks, while Washington's plan to take control of two mortgage lenders supported banks.

The FTSE 100 was down 30.7 points, or 0.6 per cent at 5,415.6, well off its day's high of 5,524.8. The UK benchmark is now up 3.3 per cent for the week but down over 16 per cent for the year.

One day after the US rescue of Fannie Mae and Freddie Mac boosted global equity markets, Wall Street pared gains after a report that showed a steeper-than-expected drop in pending sales of existing US homes in July.

US crude dropped to a new five-month low, to weigh on heavyweight oil companies, on expectations Opec would leave formal output targets steady and as the threat of Hurricane Ike to US Gulf of Mexico energy infrastructure receded.

Cairn Energy, Tullow Oil, BP and Royal Dutch Shell shed 1.8-7.8 per cent.

BG Group slipped 4.3 per cent. The gas producer admitted defeat in its $11 billion hostile bid for Australia's Origin Energy, leaving market players to speculate who BG may target next or whether the UK firm will become a target itself.

Oil services firm Petrofac slipped 5.8 per cent after Deutsche Bank cut its stance to "hold" from "buy" and Goldman Sachs removed the stock from its "conviction buy" list.

Miners were also negative as metal prices edged down. Kazakhmys (KAZ.L, Eurasian Natural Resources, Lonmin, Xstrata and Antofagasta were between 5.7 and 9.3 per cent lower.

The weakness in energy prices was a lift for airlines British Airways and easyJet and cruise operator Carnival as fuel costs concerns abated.

UK banks pared larger gains made earlier in the session after Lehman Brothers Holdings shares lost more than one-third of their value in the US on uncertainty about the bank's ability to sell its asset management business and raise needed capital.

However, they still managed to be the top gaining sector, with Royal Bank of Scotland, HBOS and Barclays tacking on between 0.5 and three per cent.