FTSE dragged down by mining shares after disappointing China factory data

* FTSE 100 index slides 2 percent

* Mining and energy stocks lead decline

* Cairn Energy (LSE: CNE.L - news) up after positive results from well (Adds detail, updates prices)

By Kit Rees and Atul Prakash

LONDON, Jan 4 (Reuters) - Basic resources stocks slumped in Britain on the first trading day of the year on Monday, as poor factory activity data from China prompted investors to cut their exposure to the shares.

The UK mining index was the hardest hit, falling 3.7 percent for its biggest one-day percentage drop since mid-December. Shares (Berlin: DI6.BE - news) in Anglo American (LSE: AAL.L - news) , Glencore (Amsterdam: GX8.AS - news) , Antofagasta (Other OTC: ANFGF - news) , BHP Billiton (NYSE: BBL - news) and Rio Tinto dropped 3.9 to 6.2 percent.

"The mining space remains under considerable pressure on account of sector adjustment to years of over-expansion, resulting in supply gluts with slowing global growth," Mike van Dulken, head of research at Accendo Markets, said.

"The overnight China data is likely to keep a cap on sector sentiment until we get signs of stabilisation in China, hints of more stimulus from Beijing or indeed solid signs of a euro zone rebound."

A private survey showed that factory activity in China, the world's biggest metals consumer, contracted for the 10th straight month in December and at a sharper pace than in November, dampening hopes the Chinese economy would enter 2016 on steadier footing.

The mining sector's decline put pressure on the FTSE 100 index, which fell 2 percent to 6,117.76 points by 1427 GMT. The falls were on the top of a 5 percent decline in 2015.

Gold (Other OTC: GDCWF - news) miner Randgold Resources, however, led gains on Britain's blue-chip index. The shares rose nearly 3 percent as investors, spooked by concerns over global growth, flocked to gold and pushed up its price.

Energy stocks also slipped. The UK Oil and Gas index dropped 1 percent after oil prices fell earlier in the session on concerns over Asia's slowing economies. The oil price recovered as investors speculated on possible supply restrictions following deteriorating relations between major crude producers Saudi Arabia and Iran.

Saudi Arabia, the world's biggest oil exporter, cut diplomatic ties with Iran on Sunday in response to the storming of its embassy in Tehran. The attack came after Riyadh's execution of a prominent Shi'ite Muslim cleric on Saturday .

Among mid-cap companies, shares in Cairn Energy rose 2.1 percent after the oil explorer reported positive results from a well off the coast of Senegal.

(Editing by Alison Williams)