LONDON: UK shares fell on Wednesday, giving up their gains from the previous session, as a downbeat outlook from mining stock BHP Billiton cast a gloomy shadow over a battered sector.
BHP Billiton said that it expected no recovery in iron ore or coal prices in the next few years, with global markets suffering from oversupply and a slowdown in China, the world's biggest metals consumer.
The stock was down 6.5 percent, with a cut on its iron ore guidance after a dam disaster at its Brazilian joint venture adding pressure.
Price target cuts from broker Investec also hit the already battered sector, with the FTSE 350 Mining index hitting its lowest point since August 2003, down 4.7 percent.
Glencore, Anglo American, Rio Tinto and Antofagasta fell between 2.9 percent and 5.9 percent.
"That bleak stance has maybe dented the FTSE's mining sector, Billiton, Glencore, Anglo American (are) the top three fallers ... it doesn't bode particularly well," IG market analyst, Alastair McCaig, said, noting that the sell-off in Asian markets had also hit European equities.
The UK blue-chip FTSE 100 index hit a three-year low, dropping 2.7 percent to 5,720.37 points by 0932 GMT, although it slightly outperformed the broader European market.
Oil companies also fell following another slump in the price of oil, which dropped more than 3 percent towards $27 a barrel, its lowest since 2003, on persistent worries about oversupply.
The FTSE 350 Oil and Gas index was down 3.5 percent, while oil major Royal Dutch Shell, which said that it expected its takeover of BG Group to go through within weeks, dropped 4.7 percent.
Royal Dutch Shell also said that it expected full-year core earnings of $10.4-10.7 billion, slightly below a company- provided consensus of $10.8 billion.
Acquisition target BG Group retreated 2 percent, while sector peer BP was down 2.6 percent.
The only FTSE consituent to make gains was precious metals miner Randgold Resources, advancing 0.4 percent following a price target upgrade from broker Investec.
Among mid-caps, pub chain operator J D Wetherspoon plunged 7 percent, set for its biggest daily loss since 2010, after the company warned that 2016 profits would be at the lower end of analysts' expectations.
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