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Britain's FTSE falls 1.8 pct early on BT, oils

* FTSE 100 falls 1.8 pct

* BT slumps after says to miss forecasts

* Weak crude prices hurt energy stocks

(For more on the financial turmoil, click on [nCRISIS])

By Dominic Lau

LONDON, Oct 31 (Reuters) - Britain's leading share index fell 1.8 percent early on Friday, snapping a three-day rally, as BT Group BT.L dived after saying it would miss earnings forecasts, while weaker crude prices weighed on energy stocks.

By 0923 GMT, the FTSE 100 .FTSE was down 78.16 points at 4,213.49, after rising for three days in a row.

Heavyweight energy stocks were the top losers, tracking weaker crude prices CLc1. BP BP.L, Royal Dutch Shell RDSa.L, BG Group BG.L and Cairn Energy CNE.L were off between 1 and 3.4 percent.

Highlighting the tough climate, telecoms firm BT Group BT.L said its second-quarter earnings would be slightly below expectations due to the poor performance of its Global Services unit, and the head of that division resigned. BT shares plunged 19 percent.

Peer Cable & Wireless CW.L lost 2.8 percent.

HSBC HSBA.L shed 6 percent after Goldman Sachs downgraded Europe's biggest bank to "sell" from "hold", traders said.

Barclays BARC.L advanced nearly 10 percent, to top the FTSE 100 gainers' list after the bank said it would raise up to 7.3 billion pounds from Middle East and other investors to boost capital and its nine-month pretax profits were slightly ahead of 2007. The shares later eased back and turned negative, however.

Within the sector, Royal Bank of Scotland RBS.L put on 0.6 percent, HBOS HBOS.L climbed 4.5 percent and Lloyds TSB LLOY.L added 0.9 percent.

“We have an excellent week all round. I think the actions of everybody (governments and central banks) are beginning slowly but surely to come together. There is still an enormous job in hands. It will take years,” said Howard Wheeldon, senior strategist at BGC Partners.

“There is a little bit of confidence creeping back into the markets, but, notwithstanding, we will have some more bad days to come.”

The index has gained 8.5 percent this week and is on track for its best weekly rise since September 2001. However, the UK benchmark is still down 14 percent for the month and nearly 35 percent in the year to date.

Japan followed the United States, China, Hong Kong, Norway and Taiwan this week in easing monetary policy, cutting its interest rate by 20 basis points to 0.3 percent. But Tokyo's Nikkei average .N225 fell 5 percent as the market had expected a 0.25 point cut.

WEAK CONSUMER SENTIMENT

In further signs that the UK economy is set for a sharp slowdown, research company GfK NOP said its consumer confidence index slipped to -36 in October from -32 in September, a bigger fall than forecast. [ID:nLU177813]

Also, John Lewis Partnership [JLP.UL] said sales at its 27 department stores last week fell 9.8 percent year-on-year.

Retailers Marks & Spencer MKS.L, Next NXT.L and Kingfisher KGF.L fell 3 to 4.5 percent.

Miners were also on the back foot, as metal prices softened and after UBS downgraded earnings per share for the sector by 48 percent for 2009 and 43 percent for 2010.

Anglo American AAL.L, Rio Tinto RIO.L, BHP Billiton BLT.L, Vedanta Resources VED.L, Kazakhmys KAZ.L and Fresnillo FRES.L lost 0.3 to 5.1 percent.

“On the back of the further downgrade in global growth estimates and our expectations that the risks for further downgrades over the course of the next several quarters are quite high; we have cut commodities estimates by on average 37,” the broker said.

Insurer Friends Provident FP.L gained 9 percent after it said it has no intention of looking for fresh capital. The insurer said it was abandoning the sale of wealth management unit Lombard, nine months after putting the business on the market, and reported a 14 percent drop in nine-month sales.

But elsewhere the sector, Standard Life SL.L dropped 2.9 percent and Aviva AV.L lost 4.2 percent. (Editing by Quentin Bryar)

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