By Sarah Thompson Oct. 8 (Bloomberg) -- U.K. stocks dropped, led by energy producers, as government plans to pump 50 billion pounds ($87 billion) into the banking system failed to soothe concerns the global economic slowdown is worsening. BP Plc, Europe's second-biggest oil company, and BHP Billiton Ltd., the world's largest mining company, declined at least 4.9 percent. The benchmark FTSE 100 index lost 203.5, or 4.4 percent, to 4,401.72 at 10:47 a.m. in London, the lowest since August 2004. The FTSE All-Share Index retreated 3.9 percent. Ireland's ISEQ Index fell 5.9 percent. ``It is not as sexy a package as we would have hoped for but at least there is a response now to the crisis,'' said Martin Slaney, head of derivatives at GFT Global Markets in London. ``Given the collapse in U.S. markets last night, it's all being lost in the noise. Investor sentiment remains dire.'' The S&P 500 fell below 1,000 for the first time since 2003 yesterday, while the S&P 500 Financials Index slumped 12 percent to its lowest level since 1997 even after Federal Reserve Chairman Ben S. Bernanke signaled he is ready to cut interest rates. BP dropped 4.9 percent to 425.25 pence and BHP retreated 8.3 percent to 997 pence. Crude oil fell to a 10-month low and industrial metals tumbled as U.S. and European rescue measures failed to assuage concerns the financial crisis will escalate. Copper declined $330, or 5.9 percent, to $5,300 a ton. Tin dropped to a one-year low and nickel declined to the lowest in 33 months. Platinum for immediate delivery dropped $39, or 3.8 percent, to $975.50 an ounce in London. `Major Falls' ``I expect mining shares, exposed to base metals, to continue to suffer further major falls as metals prices follow equity markets lower,'' said John Meyer, a London-based analyst at Fairfax. ``The inevitable reduction in global economic growth forecasts will reduce expectations for demand and prompt further selling of metals and other commodities.'' Royal Bank of Scotland Group Plc, the U.K.'s second-largest bank, rallied 16 percent to 104.6 pence after plunging 39 percent yesterday. HBOS Plc, the lender which agreed to be bought by Lloyds TSB Group Plc, jumped 44 percent to 135.5, after losing more than half its market value in the previous two days. Prime Minister Gordon Brown's government will invest about 50 billion pounds in an unprecedented step to prevent a collapse of the U.K. banking system. As part of the plan, the government will buy preference shares, and the Bank of England will make at least 200 billion pounds available for banks to borrow under the so-called special liquidity plan, the Treasury said in a Regulatory News Service statement today. The government will also provide a guarantee of about 250 billion pounds to help refinance debt. The following stocks also rose or fell in the U.K. market. Stock symbols are in parentheses. U.K. companies: J Sainsbury Plc (SBRY LN) dropped 36.75 pence, or 12 percent, to 278. The third-largest U.K. supermarket chain reported faster sales growth after cutting prices and offering more food under its own brand, retaining shoppers as the U.K. economy slows. The shares fell amid speculation investor Robert Tchenguiz will be forced to sell his stake, as well as concern the price reductions will crimp earnings. Land of Leather Holdings Plc (LAN LN) decreased 0.38 pence, or 4.4 percent, to 8.25. The U.K. upholstery retailer reported a full-year net loss of 775,000 pounds from a profit before. Rugby Estates (RES LN) fell 11.5 pence, or 4.1 percent, to 272.5. The U.K. real estate investor focused on central London shops and offices made a loss for the first time since it sold shares in 1994 as the value of its property portfolio dropped. Thorntons Plc (THT LN) added 5 pence, or 4.5 percent, to 117. The U.K. chocolate maker founded in 1911 said first-quarter revenue rose 6.4 percent, boosted by sales to supermarkets. To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.

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