British shares falter as Fed, oil play Scrooge

* FTSE 100 drops 0.8 pct, FTSE 250 down 0.9 pct

* Oil cos worst performing blue-chip stocks

* Cruise co Carnival slides on weak forecast (Adds company news items, updates share moves)

By Muvija M and Shashwat Awasthi

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 0.8 percent with the mid-capindex .FTMC 0.9 percent lower, after hitting multi-year lowsin early trading.

In result-driven moves, Carnival CCL.L tanked 10.8 percentto the bottom of the main index after the world's largest cruiseoperator forecast an adjusted profit for the first quarter thatmissed market expectations. urn:newsml:reuters.com:*:nL3N1YP4QG

Oil heavyweights Shell RDSa.L and BP BP.L were thebiggest drags on the main index, as crude prices slipped backinto negative territory.

Utilities, often seen as a safe haven, helped the main indexrecoup some losses. National GridNG.L was up 2.4 percentafter a rating upgrade by CFRA, with Severn Trent SVT.L andUnited Utilities UU.L also rising.

But the UK indices are on track for their worst year sincethe 2008 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 spiralling down.

The Fed news and falling greenback hit mining stocks, withAntofagasta ANTO.L , BHP GroupBHPB.L , Rio Tinto RIO.L andAnglo American AAL.L all down between 2 percent and 3.7percent.

"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."

Back at home, the Bank of England kept interest ratesunchanged on Thursday but trimmed its economic growth forecastfor the last quarter of the year, acknowledging that Brexituncertainty had "intensified considerably" over the last month. urn:newsml:reuters.com:*:nL8N1YP3NZurn:newsml:reuters.com:*:nL8N1YP39O

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.

Among mid-caps, construction firm Kier GroupKIE.L ekedout a 1.6-percent gain, having earlier fallen 13 percent aftersaying that less than half of its shares were bought byshareholders in a fundraising. Still, its market value hasshrunk over 64 percent this year. urn:newsml:reuters.com:*: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 overall sentiment, sandwich maker GreencoreGroup GNC.L was the top mid-cap gainer with a 7.2 percentsurge after announcing plans to buy back 509 million pounds ofshares at a double-digit premium.

AIM-listed electricity and gas supplier Yu GroupYU.L slumped 14.7 percent after it admitted to serious historicalfailures in an accounting review and said its profit would behit as a result.

(Reporting by Muvija M and Shashwat Awasthi in Bengaluru,additional reporting by Helen Reid in London; editing byJosephine Mason) ((Muvija.M@thomsonreuters.com; within U.S. +1 646 223 8780,outside U.S. +91 80 6749 3638; Reuters Messaging:muvija.m.thomsonreuters.com@reuters.net))

(( 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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