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LONDON (Alliance News) - London equities saw all of their gains eroded towards the close Monday as falling oil prices weighed on stock indices, which had spent most of the session comfortably in the black.

The FTSE 100 closed down 0.3% at 6,034.84, the FTSE 250 ended down 0.2% at 17,076.86 and the AIM All-Share closed down 0.1% at 724.64. European stocks also saw a late sell-off, with the CAC 40 in Paris ending down 1.3% and the DAX 30 in Frankfurt closing down 1.0%.

On Wall Street, the DJIA was up 0.1%, the S&P 500 was up 0.2% and the Nasdaq Composite was up 0.3%.

Oil prices sparked a late sell-off in European stock markets as they continued to fall to multi-year lows. On Monday, Brent oil fell to a low of USD36.01 a barrel, which is its lowest price since December 2008, when it hit a low of USD34.93 a barrel. If it were to surpass this low, it would reach prices last seen in 2004.

The low oil price suppressed the FTSE 100's gains and at the London close Brent was quoted at USD36.18 a barrel. Royal Dutch Shell closed amongst the worst performers in the index, with 'A' shares down 1.5%. BP ended down 1.2%, also amongst the FTSE 100's biggest fallers.

Miners were amongst the best performers in the FTSE 100, with Glencore ending up 2.7%, Antofagasta up 2.1% and Fresnillo ending up 1.9%.

The mining sector was helped by a rebound in commodity prices on Monday. Gold was one example of this, it was quoted at USD1,079.20 an ounce at the London close compared to USD1,065.60 an ounce at the London equities close on Friday.

"The gold bounce runs in the face of a recovery in equities and shows that while investors are buying into the recovery story for now, they are also taking out some insurance," said Jasper Lawler, market analyst at CMC Markets.

Whilst the mining sector traded higher on Monday, it has experienced a tough year in 2015, with the FTSE 350 Mining sector index hitting 11-year lows earlier this month. Liberum analysts Richard Knights and Alexandre Schmidt believe there is still further downside for miners in 2016, as further demand deterioration and growing supply in key commodities imply another leg down for the sector.

"Despite weakness in iron ore and copper prices this year, demand from the world's largest consumer [China] hasn't yet turned negative cumulative [year-to-date]," Knights and Schmidt said. "Given the headwinds to property construction from sharply negative new starts and land purchases (as well as indebted developers in Tier 3+ cities), risks of negative demand are high."

In addition, the Liberum analysts said despite historical evidence suggesting the dollar normally weakens in the six months after a US Federal Reserve interest rate hike, they still expect some dollar strength, which translates to lower commodity prices.

On Monday at the London close the dollar's gains had paused following the Fed's rate hike last Wednesday. The pound traded the dollar at USD1.4882, only a touch lower than USD1.4909 at the London close on Friday. The euro was higher than the close last Friday, trading at USD1.0924 Monday morning compared to USD1.0848.

ITV ended as one of the best blue-chip performers, up 2.9%, after the Mail on Sunday reported executives from US media giant Comcast are believed to be considering a GBP11.0 billion bid for British broadcaster.

Talks have been held between ITV and Comcast's TV and film arm NBCUniversal, the newspaper report said without citing its source. ITV and NBCUniversal both declined to comment to the Mail on Sunday, it said.

Associated British Foods closed down 2.7% at 3,236.00 pence after RBC Capital downgraded the owner of discount fashion retailer Primark and of British Sugar to Underperform from Sector Perform, and lowered its price target on the stock to 3,000p from 3,700p.

RBC said AB Foods has a strong management team but the company faces cost and currency headwinds, and it thinks Primark's longer-term profit pool may be constrained by a lack of online exposure.

Dixons Carphone closed up 1.5% after it was made RBC's top general retail pick for 2016. The bank said it expects the electricals and mobile phone retailer to gain more market share and sees undervalued growth potential in its Sprint and Connected World Services businesses.

In the economic calendar on Tuesday, there are German import price index and Gfk consumer confidence survey results, both at 0700 GMT before UK public sector net borrowing, due at 0930 GMT. In the afternoon, the final reading of US third quarter GDP and US personal consumption expenditure prices are both at 1330 GMT. US housing price index is at 1355 GMT and existing home sales at 1500 GMT.

The only scheduled UK corporate release is full-year results from investing company Concha.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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