FTSE slides as demand worries hit commodities

* FTSE 100 falls 1.2 percent

* Commodity stocks fall as metals, oil prices dip

* Banks fall, pressured by sliding UK property market

By Simon Falush

LONDON, Dec 1 (Reuters) - Britain's leading share index fell 1.2 percent in early trade on Monday as demand worries dented commodity prices, dragging down miners and energy stocks, while more signs of a sickly property market dented banks.

By 0843 GMT the FTSE 100 .FTSE fell 52.66 points to 4,235.35 after gaining 1.5 percent on Friday and 13.4 percent on the week, its best ever weekly performance.

The retreat in UK shares followed a dip in Asian stocks which ended a six-day winning streak, as the recent recovery in risk appetite from global investors appeared to run out of steam as fears on the state of the economy returned to the surface.

Fears of slowing demand hit commodity stocks with miners the heaviest losers on the benchmark index.

Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) slid 4.9 percent after it suspended more ferrochrome production due to weak market conditions while Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) fell 4.2 percent, and Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz) lost 2.6 percent.

"There is little or no good news for equity investors frankly," said Peter Dixon, UK economist at Commerzbank.

However, he said that equity prices were unlikely to fall significantly further.

"A lot of the bad news is priced in, and although we're seeing the worst recession for 30 years, I think equities look oversold so I don't think we'll necessarily post new lows."

OIL SLIDES

Oil prices slid more than $2 CLc1 to $52 after producer cartel OPEC decided to delay a decision on a third supply cut to its next meeting in December as economic woes squeeze oil demand.

Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) fell 1.2 percent, BP (BP.L: Quote, Profile, Research, Stock Buzz) fell 1.9 percent and Cairn Energy (CNE.L: Quote, Profile, Research, Stock Buzz) slid 0.3 percent.

Banks were under pressure as fears of the health of the sickly UK housing market added further pressure to the beleaguered sector.

House prices in England and Wales fell by 1.1 percent in November to take them 8.1 percent lower on a year ago, property consultancy Hometrack said in its monthly survey.

Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) fell 4 percent, Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz) lost 0.4 percent and HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) dell 0.7 percent.

Meanwhile, the outlook for British manufacturers has deteriorated significantly over the last quarter, a survey carried out by the Engineering Employers Federation showed on Monday, warning conditions in 2009 are set to be some of the toughest for two decades.

Further, heavy discounting by Britain's retailers has failed to boost shopper numbers and the rate of business failures in the industry is accelerating, surveys by researchers Experian showed.

Kingfisher KGFL.L, Marks & Spencer (MKS.L: Quote, Profile, Research, Stock Buzz) and Next (NXT.L: Quote, Profile, Research, Stock Buzz) fell between 2.6 and 3.9 percent.

The deteriorating economic environment has put pressure on global central banks to ease monetary policy.

Investors will eye interest rate decisions this week from both the Bank of England and the European Central Bank, with both expected to deliver further easing in monetary policy on Thursday. (Editing by Victoria Bryan)