Britain's top shares dipped on Friday to end down on the week as oil and mining stocks were hit by a tumble in commodity prices and insurer Old Mutual fell on the prospect of making its biggest ever acquisition. Old Mutual tumbled 5 percent after saying it was in talks to buy Swedish insurer Skandia in a deal that could create a financial services group valued at around $15 billion. Dealers said there was concern that Old Mutual would get involved in a costly bidding war or be forced to issue shares to pay for the deal. Airline British Airways bucked the trend and rose 2.4 percent after reporting forecast-beating profits by slashing costs and filling more seats. "BA is proving that profits can rise despite sharply higher fuel costs," analysts at Dresdner Kleinwort Wasserstein said, repeating their "buy" stance.
The FTSE 100 share index closed down 6.7 points at 4,886.5, near the top of the day's 39-point range after a steady start on Wall Street but still down 0.7 percent over the week.
Shares opened on the back foot after a weak finish on Thursday by their US counterparts, and dealers said worries that consumers have reined in spending kept investors reluctant to step back in.
"There are big concerns over the consumer, how long the slowdown is going to carry on for and the spectre of tax rises," said Peter Cockburn, investment director for UK equities at Scottish Widows.
But Cockburn said equities offered good value and some of the slowdown worries might be overdone. "With interest rates close to turning (lower) and employment remaining strong, we would see it as more of a short-term blip, but at the moment it's like trying to catch a falling knife in terms of a lot of the stocks exposed to consumer spending," he added.
Oil and mining stocks were the main drag after a fall in underlying commodities prices, and the two sectors accounted for 9 points of the FTSE's fall.
BP and Shell dipped, and mid-cap oil names Dana Petroleum, Burren Energy and Premier Oil all shed over 4 percent after oil prices dived to a three-month low near $48 a barrel due to high US inventories and slowing demand.
Miners BHP Billiton, Rio Tinto and Antofagasta all lost over 2 percent as copper and gold prices fell.
Corus sagged 4.7 percent after US steel shares dropped overnight and German rival ThyssenKrupp missed earnings expectations.
Food retailer William Morrison nudged 0.4 percent higher after it said the cost of running dual systems for its Safeway and Morrison operations will cause operating margins to run significantly short of last year's level for much of 2005, but dealers said investors were relieved the update was not worse after widespread talk this week it might issue another profit warning.
Engine maker Rolls-Royce topped the FTSE leaderboard with a 3 percent rise to 260p after Merrill Lynch upgraded its rating on the stock to "buy" with a fair value estimate of 300p for its shares.
Tobacco firm Gallaher rose 1.7 percent after it was included in the MSCI World Index, which often prompts passive fund managers to buy shares in the company. Mid-cap insurer Britannic jumped 6 percent after also joining the influential index.
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