FTSE hits six-week low as emerging markets knock beverage stocks
* FTSE 100 down 1.1 pct
* Diageo, SABMiller hit by analyst downgrades
* Beverage sector falls 8.5 pct this week on EM worries
* BT top riser as it returns to revenue growth
LONDON, Jan 31 (Reuters) - British blue chip shares fell to six-week lows on Friday and were set for their worst month since June as beverage stocks continued to suffer from emerging market turmoil and disappointing results.
Diageo shares fell 2.9 percent, a top FTSE 100 faller, as various investment houses including Goldman Sachs weighed in on the world's biggest spirits firm.
Its losses extended a 4.7 percent plunge on Thursday after the company said its revenues were hurt by emerging market weakness.
Goldman Sachs removed Diageo from its Conviction List and downgraded its rating on the stock to "neutral", saying it expected a weaker performance in the first half to persist into the second half of 2014, with emerging market challenges continuing into next year.
"Goldman Sachs haven't done Diageo any favours. Everything depends on how long this emerging market crisis continues for. If it blows over, then all will be well in the garden, if it has legs, then the impact is likely to be more profound," Jeremy Batstone-Carr, analyst at Charles Stanley, said.
"At the moment, though, I think it's just sentiment driven."
Brewer SABMiller, which also has substantial exposure to emerging markets, fell 3.1 percent, hit by a downgrade from Societe Generale. The FTSE 350 Beverage index fell 3.1 percent, the biggest sectoral faller, taking its weekly loss to 8.5 percent.
The FTSE 100 was down 71 points, or 1.1 percent, at 6,467.45 points by 1142 GMT, set for a 4.2 percent drop for the month of January, its biggest monthly fall since last June and its worst January since 2009.
After an encouraging start to the year, which saw the UK benchmark post gains in the first two weeks, equity markets took a turn for the worse as unease about slowing Chinese growth and the withdrawal of U.S. monetary stimulus spread from emerging market currencies to the world's big stock markets.
The index hit new six-week lows on Friday, having dropped 5.3 percent over the last six days.
Ed Woolfitt, head of trading at Galvan, was looking for the index to regain the 6,500 level before the close to confirm support for the index. The FTSE 100 has not closed below 6,500 since December.
"If you are brave enough to buy on the current dip then now is the time. However, I will be waiting a day or two to make sure it is just a dip before moving in," Woolfitt said.
Only nine FTSE 100 stocks rose, with BT the top riser, up 2.6 percent, after it reported quarterly revenue growth for the first time in four and a half years, driven by record customer demand for superfast broadband and its growing new sports TV service.
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