FTSE posts biggest weekly drop in 3 years, led by commodity stocks

* FTSE 100 index falls 2.5 percent on the day

* Biggest weekly percentage drop in three years at 6.3 pct

* 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 posted its biggest weekly loss in more than three years on Friday as crude oil prices fell further and disappointing Chinese economic data hit commodity stocks.

The FTSE 100 fell 161 points, or 2.5 percent, to 6,300.63 points, taking its weekly loss to 6.3 percent, the biggest since August 2011.

The selloff gathered pace in late trade, mirroring falls on Wall Street. Trading volume, which had been modest for most of the day, also spiked just before the closing bell to end the day 8 percent above the FTSE's average for the past three months.

Oil and gas stocks fell 3.1 percent as crude slipped to fresh lows not seen since July 2009 on concerns over a global supply glut and weak 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'."

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)."

The British mining index fell 2.5 percent after data showed factory output in China, the world's biggest metals consumer, slowed last month. It was the index's seven straight daily fall.

British 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 3.4 percent as Citi cut its stance to "neutral" from "buy".

The Office for National Statistics said on Friday that British construction output fell 2.2 percent in October after rising by the same amount in September. (Reporting By Francesco Canepa; Editing by Larry King and Crispian Balmer)