FTSE heads for worst weekly drop in two years, led by commodity stocks

* FTSE 100 index falls 1.5 percent

* On track for biggest weekly percentage drop in 2 1/2 years

* Commodity stocks slump on weaker oil, China data

By Atul Prakash and Francesco Canepa

LONDON, Dec (Shanghai: 600875.SS - news) 12 (Reuters) - Britain's FTSE share index slipped to a six-week low and headed for its biggest weekly loss in more than two years on Friday, as crude oil prices fell further and disappointing Chinese economic data hit commodity stocks.

The UK mining index, down 1.6 percent, fell for a seventh straight session after data showed factory output in China, the world's biggest metals consumer, slowed last month.

The oil and gas index fell 2.1 percent, tracking Brent crude oil's slide to a 5 1/2-year low amid a global supply glut and a bearish outlook for demand.

"Traders are assessing the impact of the fall in oil prices and selling positions in major oil producers. This is adding to the FTSE's demise along with weaker data from China," said Tom Robertson, senior trader at Accendo Markets.

"But with a pullback in prices, this may represent a buying opportunity if your view is that the markets will go back up with the seasonal 'Santa Rally'."

Commodity and energy stocks, including BG Group (LSE: BG.L - news) , Rio Tinto and BHP Billiton (NYSE: BBL - news) , knocked nearly 40 points off the FTSE 100, which was down 100 points, or 1.5 percent, at 6,362.07.

The index has fallen 5.6 percent so far this week, the biggest weekly drop since mid-2012.

Although the drop in oil prices hurt energy companies, it could help the global economy overall.

"Whilst it is difficult to disentangle how much of the slump in the oil price is demand driven, we suspect that the driving force is a supply side shock," Robert Parkes, director of equity strategy at HSBC Bank. "This has a positive read across for corporate margins (excluding energy stocks)."

UK house builders fell after Citi analysts said optimism about the sector appeared to be priced in and valuations had become more stretched after a rally over the last three months. Persimmon (Other OTC: PSMMY - news) fell 4.3 percent as Citi cut its stance to "neutral" from "buy".

Stocks that gained included Water utilities Severn Trent (Other OTC: STRNY - news) , up 2.8 percent and United Utilities (LSE: UU.L - news) , up 1.3 percent. Traders said they were helped by water regulator Ofwat's ruling on final tariffs the companies can charge customers until the end of the decade. (Reporting By Francesco Canepa; Editing by Larry King)