LONDON MARKETS: FTSE Hobbled By Oil Firms, Eurozone Growth Concerns

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- The U.K.'s FTSE 100 index erased earlier gains on Tuesday, following other European benchmarks lower, after the European Commission cut its growth forecasts. Oil firms posted some of the biggest losses, on the heels of an unexpected decision by Saudi Arabia to cut oil price.

The London stock benchmark dropped 0.5% to close at 6,453.97, adding to a 0.9% loss from Monday.

The index turned south in mid-morning trade after the European Commission said it now expects 0.8% growth in the eurozone in 2014, down from a previous forecast of 1.2%. For the U.K., however, the commission lifted its estimate to growth of 3.1% from 2.7%. Read: Stoxx 600 in the red after EU cuts growth outlook

Weighing on the benchmark, oil-related firms moved firmly lower after Saudi Arabia late Monday unexpectedly cut prices for crude sold to the U.S. The price cut also sent oil futures sharply lower, with the December contract (CLZ4) sliding to a three-year low.

Tullow Oil PLC slid 5.3%, BP PLC (BP) dropped 3%, Royal Dutch Shell PLC (RDSB) slumped 2.7% and BG Group PLC lost 3.6%.

But shares of Imperial Tobacco PLC (ITYBY) climbed 4.1% after the company posted a rise in full-year profit.

British American Tobacco PLC (BTI) added 1.3%.

Legal & General Group PLC gained 2% after the insurance firm said annuity sales have risen, despite an end to the U.K. government's requirement that pensioners buy annuities when they retire.

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