FTSE sheds 2.3 percent to 3-week low

By Harpreet Bhal

LONDON (Reuters) - The top shares fell 2.3 percent to hit a three-week closing low on Wednesday, dragged down by falls in energy stocks after BG Group (BG.L) posted a sharp drop in net profit, while miners tracked weaker metals.

The market also came under pressure on data showing new U.S. homes sales unexpectedly tumbled in September, their first drop in six months, underscoring the hazards to an economic recovery that businesses appeared to be banking on.

The FTSE 100 .FTSE closed down 120.55 points at 5,080.42, on the 80th anniversary of the "Black Monday" stock market crash of 1929, and posted its biggest one-day percentage fall since July 2.

The FTSE has rallied 47 percent since hitting a floor in March. After three months of consecutive gains from July to September, the index is on course to post its first monthly decline in four months.

"When you see the quality of economic data coming out which at best is average and you have a 50 percent rally in the last seven months, something has to give. We are just having a reality check here," said David Buik, senior partner at BGC Partners.

Miners were the biggest drag, underpinned by lower metals prices on worries about rising inventories and poor demand. Xstrata (XTA.L), Lonmin (LMI.L), Rio Tinto (RIO.L) and BHP Billiton (BLT.L) shed 6.1 to 9.4 percent.

Vedanta Resources (VED.L) lost 4.2 percent, pressured by a broker downgrade by Barclays Capital to "equal weight" from "overweight." Kazakhmyz (KAZ.L), which reports third-quarter output numbers on Thursday, was 9.1 percent lower.

BG Group (BG.L) fell 3.3 percent, after posting a 44 percent drop in third-quarter net profit to 484 million pounds as gas and oil prices plummeted, though its underlying profits beat forecasts.