Brent oil fell below $49 a barrel following a cut in short-term forecasts by Goldman Sachs. After falling for seven weeks, oil prices are at their lowest since April 2009.
The UK oil and gas index <.FTNMX0530>, which features major oil companies such as Royal Dutch Shell
Mid-cap oil and gas producer Afren (>> Afren Plc) slipped 25.5 percent after saying it was considering options for its operations in Barda Rash in Iraqi Kurdistan, citing poor drilling results.
Mining companies, which are also sensitive to concern that global growth may be weakening, dropped as copper
"The oil price fall initially reflected concerns about oversupply, but now we're seeing concerns over demand compound matters, so other commodity-related stocks are being hit," said Jeremy Batstone-Carr, a market analyst at Charles Stanley.
Domestic energy suppliers also came under pressure. SSE (>> SSE PLC) fell 5 percent, the biggest loss in the FTSE 100 index.
The utility Centrica (>> Centrica PLC) fell 3.5 percent.
Britain's opposition Labour Party said that before May's election it would try to introduce a law enabling energy regulators to force companies to cut prices when wholesale costs fall. That will put utilities under more pressure to pass on the declining price of energy to consumers.
Britain's FTSE 100 <.FTSE> index fell 44.76 points, or 0.7 percent, to 6,456.38 by 1459 GMT. By comparison, Germany's DAX <.GDAXI> and France's CAC <.FCHI>, which have less exposure to oil producers, were little changed.
Raised expectations of European Central Bank action to help fight deflationary pressure in the euro zone also stand to boost continental European equities.
The FTSE 100 has fallen 1.6 percent so far in January, extending December's 2.3 percent drop.
GKN (>> GKN plc) rose 1.5 percent, the leading gainer in the FTSE 100 <.FTSE>, after Credit Suisse raised its price target for the stock to 410 pence from 380 pence and reiterated its "outperform" rating.
(Editing by Larry King)
By Alistair Smout
