Britain's FTSE falters on Fed comments, oil dip

* FTSE 100 drops 0.4 pct

* FTSE 250 down 0.6 pct

* Oil cos worst performing blue-chip stocks

* Mentality is "sell the rally" - analyst (Adds company news items, updates share moves, adds analystcomments)

Dec 20 (Reuters) - UK shares fell to their lowest in morethan two years on Thursday, joining a wider market selloff,after the U.S. Federal Reserve bank dampened hopes for a milderpolicy outlook and oil resumed its slide.

The FTSE 100 .FTSE was down 0.4 percent with the mid-capindex .FTMC 0.6 percent lower by 1115 GMT, after earlierhitting their lowest levels since 2016.

Oil and related stocks were the biggest drags on the mainindex, with heavyweights Shell RDSa.L and BP BP.L losing 2percent each.

Utilities, often seen as a safe haven, helped the main indexrecoup some losses. National GridNG.L was up 2.1 percentafter a rating upgrade by CFRA, with peers Severn Trent SVT.L and United UtilitiesUU.L also rising.

The UK indexes are on track for their worst year since the2008 financial crisis, and the Fed's tone deepened concernsalready augmented by Brexit worries.

Despite calls by U.S. President Donald Trump for the Fed tostop raising interest rates, the central bank on Wednesday stuckby a plan to keep repealing support from an economy it views asstrong, sending Wall Street spiraling down.

The Fed news and falling greenback also knocked miningstocks, with AntofagastaANTO.L , BHP GroupBHPB.L , Rio Tinto RIO.L and Anglo AmericanAAL.L all down between 2.7 percentand 3.8 percent.

"The outlook has changed, for ten years we have been talkingabout buying the dip. The mentality is different now, it is sellthe rally," said CMC Markets analyst Michael Hewson.

"My fear is that the Fed is ignoring the clouds of concernaround the global economy and happily putting on sun cream whenthere is a shower just around the corner."

After starting the week with a profit warning from onlinefashion store ASOSASOS.L that shook retail stocks, theshopping sector saw some good news as British retail salestopped expectations in November thanks to Black Fridaypromotions.

In mid-caps, construction firm Kier GroupKIE.L recoveredfrom double-digit losses earlier in the session to be 2 percentlower after saying that less than half of its shares were boughtby shareholders in a fundraising. Its market value has alreadyshrunk 64 percent this year.*:nL3N1YP2TM

Investors have dumped shares in the construction sector amidworries about mounting debts after Carillion'sCLLN.L collapseand the impact of Brexit on real estate.

"After Carillion, everyone wants to kill these types ofnames," said a trader.

Defying the sentiment, sandwich maker Greencore GroupGNC.L was the top mid-cap gainer with a 7.6 percent rise afterannouncing plans to buy back 509 million pounds of shares at adouble-digit premium.

AIM-listed electricity and gas supplier Yu GroupYU.L slumped 22 percent after it admitted to serious historicalfailures in an accounting review and said its profit would behit as a result.

(( For related prices, Reuters users may click on - * UK stock report .L FTSE index: 0#.FTS6 techMARK 100 index: .FTT1X FTSE futures: 0#FFI: Gilt futures: 0#FLG: Smallcap index: .FTSC FTSE 250 index: .FTMC FTSE 350 index: .FTLC Market digest: .AD.L Top 10 by vol: .AV.L Top price gainers: .NG.L Top % gainers: .PG.L Top price losers: .NL.L Top % losers: .PL.L

* For related news, click on - * UK hot stocks: [HOT and GB] Wall Street: .N Gilts report: GB/ Euro bond report GVD/EUR Pan European stock report: .EUTokyo stocks: .T HK stocks: .HK Sterling report: GBP/ Dollar report: USD/

* For company prices, click on - * Company directory: UKEQ By sector: FTAX

* For pan-European market data, click on - * European Equities speed guide................ EUR/EQUITY FTSE Eurotop 300 index........................... .FTEU3 DJ STOXX index................................... .STOXX Top 10 STOXX sectors........................ .PGL.STOXXS Top 10 EUROSTOXX sectors................... .PGL.STOXXES Top 10 Eurotop 300 sectors.................. .PGL.FTEU3S Top 25 European pct gainers.................... .PG.PEUR Top 25 European pct losers..................... .PL.PEUR ))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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