FTSE drops to two-week low as commodity shares, Vodafone slump

* Blue-chip FTSE 100 index falls 1 percent

* Oil price hits new low, China data knocks miners

* Vodafone pegged back by takeover speculation (Updates with closing prices)

By Alistair Smout

LONDON, Dec 1 (Reuters) - Britain's top stock index dropped to its lowest in two weeks on Monday as commodity shares slumped and Vodafone fell on speculation it is considering possible acquisitions.

Weak Chinese economic data compounded concern over commodity stocks. An official reading showed growth in China's factories slowed more than expected in November, and a private-sector survey showed momentum stalled.

The FTSE 350 mining sector fell 1.4 percent to its lowest close since July 2013. Oil and gas stocks were down 0.8 percent after touching a 3 1/2-year low.

Brent oil fell to a five-year low, extending last week's losses after OPEC decided not to cut production, while copper tumbled to a 4 1/2-year low.

Both prices rebounded from early lows, however, while the decline in riskier assets saw gold trade 3 percent higher. It had dropped 2 percent earlier as Swiss voters voted against forcing the central bank to increase its gold reserves.

Precious metals miners Randgold and Fresnillo reversed early losses as gold rallied.

"Commodity stocks have been volatile and seen substantial losses, but we've seen a near-term low in crude oil and in gold. Commodity stocks are off their lows, and we're seeing buyers at these levels," Manoj Ladwa, head of trading at TJM Partners, said. "It's still not looking fantastic on a fundamental basis, especially with continued weakness out of China."

Tullow Oil (LSE: TLW.L - news) was down 6 percent. It had fallen 8.5 percent to a seven-year low in early trade after Citigroup (NYSE: C - news) and JPMorgan cut their target prices for the shares. Overall, oil, gas and mining stocks trimmed over 14 points from the index.

The FTSE 100 closed down 1 percent to 6,656.37 points, after falling as low as 6,637.39, the lowest since Nov. 17. It is down just over 1 percent this year.

Vodafone fell 2.9 percent and trimmed 7 points off the index.

Traders said the fall was caused by speculation Vodafone was reviewing potential acquisitions. Reuters reported on Friday it was considering a deal for Europe's leading cable operator, Liberty Global (NasdaqGS: LBTYA - news) .

"While we see clear strategic logic in a LBTY deal, its size and timing may be negative for VOD investor sentiment," analysts at UBS (NYSEArca: FBGX - news) said in a note.

Aberdeen Asset Management (Other OTC: ABDNF - news) rose 1.7 percent, the top FTSE riser, after it reported a "transformational" performance by its Scottish Widows Investment Partnership acquisition on Monday and raised hopes of a share buyback. (Editing by Catherine Evans)