The FTSE 100 fell in early trade on Monday, as Japanese intervention on the yen and worries over demand from China dented commodity stocks, while the index remained set for one of its best monthly gains on record.

Miners, which are already struggling with lower metals prices, were top fallers on the UK's benchmark index, as the intervention by Japan to tame the high-flying yen strengthened the greenback, making dollar-denominated commodities more expensive for buyers holding other currencies.

BHP Billiton , down 2.8 percent led the heavyweight mining sector <.FTNMX1770> lower with worries over demand from China also weighing.

China's steel industry association said the country is still unwilling to buy iron and stockpiles of expensive ores remain stubbornly high.

Integrated oils <.FTNMX0530> fell too along with crude oil, as traders said Japan's move also provided an opportunity for profit taking on a sector that has gained more than 14 percent in October.

UBS said in an equity strategy note said it had tactically upgraded risk assets in its model portfolio but continued to prefer U.S. and general emerging market stocks over Europe.

The broker also trimmed its overweight in precious metals back to neutral. Precious metal miner Randgold Resources fell 1.9 percent.

Mining and integrated oil stocks took 30 points off London's blue chip index <.FTSE>, which fell 59.60 points, or 1.1 percent to 5,642.64 by 7:46 a.m.

The FTSE 100, up 10.1 percent in Oct, is currently enjoying its best monthly gain since Sept 1992.

Atif Latif, director of trading at Guardian Stockbrokers said weekly chart indicators are tranquil but above their midline, suggesting that sideways to the higher levels are still possible.

He said: Immediate support lies at 5,570 levels, followed by 5,500 and an important one at 5,370. Index breaching 5,370 might bring further weakness.


Following the euphoria of the European debt deal being agreed last week, traders said focus would now be on the detail, in particular how the extended European Financial Stability Facility (EFSF) would be funded.

European Financial Stability Facility (EFSF) Chief Executive Klaus Regling could not convince Japan, which is concentrating on the state of its own economy, to commit to putting cash into a mooted special purpose vehicle to enhance the rescue fund's firepower.

Japan's stance echoed that of China and said it would continue to buy Europe's bonds.

Chris Weston, dealer at IG Markets, said with investors now awaiting further details on how plans drawn out by European leaders would be implemented, ahead of the G20 summit starting on Thursday, the market would likely see consolidation in the short-term.

Many stocks (are) back into territory that could at best be described as toppy and even if the upside has managed to last a few days, a degree of reversion does now appear to be on the cards.

Banks <.FTNMX8350>, which have gained more than 14 percent in October, fell as risk appetite faded, with HSBC down 1.0 percent.

Barclays , however, bucked the weaker trend rising 2.3 percent after reporting that underlying quarterly profit rose 5 percent from a year ago as lower charges for bad debt at the British bank offset a third consecutive sharp fall in investment banking revenue.

Preventing the index from plunging further were defensive stocks - equities that tend to perform well in difficult markets.

Utilities International Power and National Grid rose as much as 0.8 percent, while Vodafone , which offers reliable dividend returns climbed 0.5 percent.

On the macroeconomic front there are mortgage approvals and new lending data due out at 9:30 a.m., but the main focus for investors will the interest rate announcements out of the UK, U.S. and Europe later this week and the G20 summit.

(Editing by Jon Loades-Carter)