FTSE drops away after touching new record high

By Alistair Smout

LONDON (Reuters) - Britain's top equity index briefly touched a new record high on Monday before turning negative as commodity stocks weakened, led lower by a slump in Tullow Oil.

The blue-chip FTSE 100 equity index rose as much as 0.3 percent to a record intraday high of 6,974.26 points, with early gains propelled by mining stocks after China, the world's biggest consumer of metals, cut interest rates over the weekend.

However, the miners tracked copper lower following their initial rise, with analysts saying that the cut raised worries over the state of China's growth.

"While the rate cut would seem be good for the miners, it's a worry that the Chinese central bank feels the need to do this," said Alastair McCaig, market analyst at IG.

"It's a reflection of the fact that anticipated growth in China could be weaker than previously thought."

The reversal in the mining sector saw the FTSE 100 turn negative after the new high. It was down 6.02 points, or 0.1 percent, at 6,940.64 at the close.

Tullow Oil was the day's biggest faller, dropping 7.7 percent in trading volume nearly twice its 90-day average on concerns that a boundary dispute between Ivory Coast and Ghana could delay a project off the coast of west Africa.

Tullow lost over 200 million pounds of its market value and, at current prices, its relegation from the FTSE 100 is set to be confirmed later this week, the FTSE said.

"There's news that they're going to be falling out of the FTSE, so there'll be index sellers moving their shares in Tullow," said Zeg Choudhry, managing director of LONTRAD.

Intertek rose 1.3 percent in similarly high volume after the product-testing company posted higher profits and revenues and raised its dividend.

It hit a 3-1/2 month high, marking a recovery of more than 20 percent since its December low.

British Land was also higher, up 2 percent after saying it had bought the Surrey Quays leisure park for 135 million pounds.

"This acquisition should fit snugly into their overall gameplan," IG's McCaig said.

(Editing by Kevin Liffey)