London's FTSE reaches three-week low, as oil slump pressures energy shares

On Tuesday Britain's top share index dipped to a three-week low, since a further decline in crude oil prices kept hurting energy shares. 

A 7.9 percent decline in British industrial equipment hiring company Ashtead contributed to the pressure on the market. Traders said the stock was reacting to an 11 percent slump in its rival United Rentals overnight after a broker downgrade on the U.S. company.

The blue-chip FTSE 100 index lost 1.3 percent to reach 6,336.93 points by 0910 GMT after dropping as low as 6,328.59, its lowest since mid-December.

The index finished 2 percent down in the previous session on the back of weaker oil prices and political uncertainty in Greece.

Today energy shares were the biggest sectoral decliners, with the UK Oil and Gas index falling 1.9 percent, after sinking 4.3 percent in the previous session, as oil extended losses to touch a new 5-1/2-year low on over-supply concerns. Crude oil plunged 5 percent on Monday.

Energy companies BP, Tullow Oil and Royal Dutch Shell fell 0.7 to 3.1 percent.

"In the near term, themes such as slumping oil prices and the future for Greece continue to occupy investors. It's difficult to be positive on energy shares near term as oil prices fall, with no clear turnaround catalyst yet visible," Keith Bowman, equity analyst at Hargreaves Lansdown, said.

Analysts said the market was likely to remain under pressure in the near term on concern over Greece, where a Jan. 25 election might vault the left-wing Syriza party into power, raising the risk of a sovereign default.

"Continuing uncertainty surrounding the upcoming Greek election and the potential fall-out of Greece possibly leaving the euro is spooking investors," Peregrine & Black senior analyst, Markus Huber, said.

Photo: Walesonline.co.uk