FTSE eases as commodities slide hits miners

By Amanda Cooper

LONDON (Reuters) - The FTSE eased on Friday as falling commodity prices helped quell fears over inflation but hit shares in the index-heavyweight oil and mining sectors.

The FTSE 100 .FTSE fell 0.77 percent, or 42.6 points, to 5,454.8 points after a 0.9 percent rise on Thursday.

The index fell 0.6 percent this week and is on track for a modest 0.8 percent rise in August, which would be the first monthly gain in four months.

The pound GBP= falling to its lowest in over two years intensified the pressure on the commodities sectors, which together stripped a net 52 points off the index.

While the slide in the commodities complex has relieved some of the concern among investors about rising inflation and potential rate rises, it caused the FTSE to underperform the rest of the major European benchmark indexes.

"It's the dual effect on the headline index, which is never going to perform that well when the commodities that these mining and oil companies are trading fall in value," said Tim Hughes, head of sales trading at IG Index.

"The flipside is you have a diversified number of stocks that generally are going to benefit if inflation does ease ... and the sooner that happens, the sooner we're looking at rate cuts to stimulate growth and that will benefit eight out of 10 companies (on the index)," he said.

Miners were the worst performing stocks on the FTSE with Antofagasta (ANTO.L), Kazakhmys (KAZ.L), Xstrata (XTA.L) and Anglo American (AAL.L) down 3.5-4.8 percent.