Britain's FTSE slips as commodity stocks surrender gains

* Blue-chip FTSE 100 falls 1.3 percent

* Energy, mining stocks slip after early gains

* MySale Group slumps 50 pct, Carpetright (LSE: CPR.L - news) jumps

By Atul Prakash

LONDON, Dec (Shanghai: 600875.SS - news) 15 (Reuters) - Britain's top equity index fell in afternoon trading on Monday, surrendering early gains, as energy shares turned negative and miners slipped on persistent concerns about global demand for commodities such as copper and iron ore.

The UK mining index fell 2.3 percent to a 5-1/2-year low, while the oil and gas index slipped 1.5 percent to its lowest level in more than four years as prices of copper, iron ore and crude oil gave up early gains to turn negative.

Oil majors BP, BG Group (LSE: BG.L - news) and Tullow Oil (LSE: TLW.L - news) were down 1.5 to 2.3 percent, while blue-chip global miners Rio Tinto and BHP Billiton (NYSE: BBL - news) fell 2.2 percent and 3.1 percent respectively. Mid-cap Ukrainian iron ore miner Ferrexpo slumped 10 percent.

"Sentiment remains very fragile as investors continue to look at the data from china and question the speed of strength of the economy," Henk Potts, director of global research at Barclays (LSE: BARC.L - news) , said, adding that China's influence on commodities puts pressure on the London market which has a very strong weighting in terms of oil and mining stocks.

Credit Suisse (NYSE: CS - news) predicted and extended period of low iron ore prices at close to current levels and cut its earnings estimates for large-cap by 20-25 percent in 2015-16.

"With China demand growth expected to remain slow the sector will remain about relative rather than absolute value and may continue to struggle against the broader market in 2015," it said in a research note.

The FTSE index was down 1.3 percent at 6,220.80 points by 1545 GMT, after rising as much as 6,356.34 earlier in the session. It fell 6.6 percent last week only and is down nearly 6 percent this year after surging 14 percent in 2013.

The index has been hit by its heavy weighting in oil stocks. While lower oil prices can support other sectors, there are signs a weakening global economy could hurt demand for oil at a time of already ample supply.

"The template is still in place: oversupply and dwindling demand mean that the pressure will still be on oil," Alastair McCaig, market analyst at IG (LSE: IGG.L - news) , said.

Shares (Berlin: DI6.BE - news) in MySale Group, in which Sports Direct has a 4.8 percent stake, slumped nearly 50 percent after the company issued a profit warning. Sports Direct is Britain's biggest sporting goods retailer and is majority-owned by founder and Newcastle United soccer club owner Mike Ashley.

However, Britain's biggest floor coverings retailer Carpetright rose 12 percent after saying it expected full-year profit to be towards the upper end of market forecasts as trading improved both at home and abroad. (Additional reporting by Alistair Smout and Sudip Kar-Gupta; Editing by Susan Fenton and Hugh Lawson)