May 4, 2010 / 4:33 PM / 7 years ago

FTSE hits 2-month closing low; commods, banks weigh

* FTSE slides 2.6 pct

* Miners slammed by Australian tax, China tightening fears

* Banks down on debt contagion worries

* Oils weak; BP hit by oil spill impact

By Tricia Wright

LONDON, May 4 (Reuters) - Britain's top share index fell sharply on Tuesday to a two-month closing low as euro zone debt contagion fears grew, hurting banks, and with miners hit by an Australian mining tax and concerns over tightening in China.

The FTSE 100 .FTSE closed down 142.18 points, or 2.6 percent, at 5,411.11, its lowest close since early March. The blue chip index, which was closed for a holiday on Monday, shed 3 percent last week.

UK-listed miners were slammed after Australia imposed a 40 percent mining tax, and with metals prices sharply lower as the dollar rallied versus the euro on worries over Greek debt and after China raised bank reserve requirements again.

Eurasian Natural Resources ENRC.L, Antofagasta (ANTO.L) and BHP Billiton (BLT.L) were the worst off, sliding 7.9 to 11.3 percent.

Also, concern mounted that a record EU/IMF bailout for Greece would not stop a debt crisis spreading in the single currency area, sparking a selling frenzy in euro zone financial markets on Tuesday. [ID:nLDE6430PO]

"If any other country struggles and requires a bailout then they're going to go cap in hand to the EU and the IMF as well, and they're going to expect to be treated exactly the same way as Greece," said Angus Campbell, head of sales at Capital Spreads.

Spanish Prime Minister Jose Luis Rodriguez Zapatero dismissed as "complete madness" a market rumour that his country would soon ask for 280 billion euros ($372.9 billion) in aid from the euro area.

Banks were weak on the FTSE 100, with Barclays (BARC.L), HSBC (HSBA.L), Lloyds Banking Group (LLOY.L) and Royal Bank of Scotland (RBS.L) off 1.9 to 7.4 percent.

Standard Chartered (STAN.L) shed 1.2 percent, but fared better than its peers after posting a record first-quarter profit and income as strong wholesale banking and improving consumer banking outweighed margin pressure from increased competition.

ENERGY DRAIN

Energy stocks also weighed heavily on the blue chip index, hit by a drop in the crude price CLc1. BP (BP.L) dropped 3 percent as investors fretted over the cost of the company's battle against the oil slick off the southern coast of the United States.

BG Group BG.L and Royal Dutch Shell (RDSa.L) fell 4.4 percent and 3.9 percent respectively.

Gains from defensive pharmaceutical and tobacco stocks offered some respite for the blue-chip index, with AstraZeneca (AZN.L), GlaxoSmithKline (GSK.L) and Shire (SHP.L) up 0.3 to 0.7 percent, while British American Tobacco (BATS.L) was 1.9 percent firmer.

Inmarsat (ISA.L) was the top FTSE 100 gainer, up 2.2 percent, with traders citing renewed speculation the satellite communications company could be the target of takeover interest as it reorganised its Stratos subsidiary. ($1=.7508 Euro) (Editing by Jon Loades-Carter)

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