By Alistair Smout
LONDON (Reuters) - FTSE drifted lower on Tuesday, hit by a drop in heavyweight banks and commodity stocks, while Royal Mail (L:RMG) led fallers after a broker downgrade.
Fresh signs of economic weakness in China, the world's biggest consumer of metals, hit miners, with the FTSE 350 Mining Index (FTNMX1770) slipping 1.9 percent.
Data on Tuesday showed China's annual inflation hit a five-year low in January while factory deflation worsened.
"The muted open comes from more disappointing China data, this time from January inflation data missing expectations, delivering yet further disinflation signals and suggesting weak demand ... but suggesting room for more stimulus," said Mike van Dulken, head of research at Accendo Markets.
Concerns over weakening demand from China hit oil and gas stocks (FTNMX0530), which were also down 1.9 percent. The price of Brent crude fell under $58 a barrel as the International Energy Agency (IEA) predicted supply may hit an all time high despite subdued demand.
Banks (FTNMX8350) fell 1.3 percent, with HSBC (L:HSBA) down 1.5 percent as global pressure built on the bank over failings by its Swiss unit.
In all, miners, energy stocks and banks combined to trim around 30 points off the blue-chip FTSE 100 (FTSE), accounting for nearly all of its losses. The index 35.40 points, or 0.5 percent lower at 6,801.40 points by 1107 GMT, cutting its gains for 2015 to around 4 percent.
It underperformed the euro zone's EuroSTOXX 50 (STOXX50E), up 0.4 percent, which benefited from its low exposure to commodity stocks as well as a rally in Greek assets ahead of a meeting of euro zone finance ministers.
The FTSE 100 reached a peak last year of 6,904.86 points, its highest since early 2000, before losing ground towards the end of 2014.
Royal Mail declined by 4.5 percent -- the worst performing FTSE stock in percentage terms -- after investment bank JP Morgan cut its rating to "neutral" from "overweight".
Supermarket retailer Marks & Spencer (L:MKS) rose 2.1 percent after brokerage RBC upgraded the stock to "outperform" from "sector perform".
