* FTSE falls 2 percent, snaps six days of gains
* Energy stocks, miners slump as commodity prices slide
* Insurers benefit, pharmas pressured by Obama victory
(For more on the financial crisis, click on [nCRISIS])
By Simon Falush
LONDON, Nov 5 (Reuters) - Britain’s top share index fell 2 percent by midday on Wednesday, ending a six-day rising streak, as investor focus returned to the stuttering domestic economy after Barack Obama’s presidential election victory in the U.S.
By 1137 GMT, the benchmark FTSE 100 .FTSE had fallen 90.40 points to 4,549.10. The index recorded its highest closing level in four weeks at Tuesday's close, up over 20 percent from its trough set in October, but is still down nearly 30 percent for the year amid a global equity slump.
“We’ve had a long up move but we’re not out of the woods and the economic environment continues to deteriorate,” said Jeremy Batstone-Carr, head of private client research at Charles Stanley.
Energy stocks took the most points off the index as crude oil prices fell over 3 percent to $68. Prices retreated after a spate of profit taking following signs that Saudi Arabia and other OPEC member countries had made promised cuts in crude production.
Royal Dutch Shell also traded ex-dividend.
Some analysts said the Obama victory was adding to the energy sector’s weakness.
“Obama is seen as anti-big oil so the market is seeing reason to take profit in oil majors,” said Jim Wood Smith, head of research at Williams De Broe in Exeter.
Miners also took a beating on falling metals prices. Kazakhmys KAZ.L, Vedanta Resources VED.L, Xstrata XTA.L and Lonmin LMI.L fell between 7.1 and 10.2 percent. A price target cut from Morgan Stanley also weighed on the stocks. [ID:nBNG177137]
British mid-market fashion retailer Next NXT.L gained 3 percent after it met its profit forecast, recovering from early losses on initial negative investor reaction to the company saying 2009 was going to be tough.
Underlining weakness in the UK economy, Britain’s dominant services sector shrank in October at its fastest pace since the series began in 1997, data from Britain’s Chartered Institute of Purchasing and Supply said. [ID:nL5408431]
Obama’s U.S election victory brought to an end uncertainty over who will lead the world’s largest economy at a time of financial turmoil.
U.S stocks had their biggest election rally ever on Tuesday, while Asian shares hit a three-week high after the election results.
Analysts said construction and infrastructure stocks are potential gainers from an Obama win, with European commercial banks set to benefit from opportunities to acquire U.S regional banks.
Other possible gainers include healthcare equipment and insurance firms, while a strong dollar would be good for European exporters, analysts said.
Insurers Prudential PRU.L and Aviva AV.L advanced 4.1 and 0.9 percent respectively. But Old Mutual OML.L shed 5.1 percent after going ex-dividend and after Morgan Stanley downgraded the stock to "equal-weight" from "overweight".
However, worries about pressure on U.S. drug prices under a democrat administration saw European drug stocks underperform. [ID:nL5203005]
Bus and train operator FirstGroup FGP.L was the index's biggest gainer, up 5.6 percent after it said its second half had started well with trading in line with expectations. This boosted sentiment on the sector, helping lift rival Stagecoach SGC.L 5.3 percent.
Unilever ULVR.L slipped 1.9 percent after going ex-dividend.
Mid-cap British broadcaster ITV ITV.L lost 2.4 percent, after it said television and online adverts were expected to be hit by the economic slowdown, making 2009 challenging. (Additional reporting by Harpreet Bhal; Editing by Victoria Bryan)