* FTSE 100 down 1.5 pct

* Vodafone biggest drag after AT&T (NYSE: T – news) says not planning takeover

* BG sees biggest fall since 1987 after production warning

* Index finds support at the 200-day moving average

By Alistair Smout

LONDON, Jan 27 (Reuters) – Britain’s FTSE 100 slipped to fresh five-week lows on Monday, extending last week’s falls on the back of steep slumps in heavyweight mobile operator Vodafone and oil and gas firm BG Group (LSE: BG.L – news) .

Vodafone, the third biggest company in the FTSE 100, fell 5.8 percent after U.S. mobile operator AT&T said it was not planning to take over the British-listed firm, thus putting an end to months of speculation.

Vodafone had seemed good value for takeover by AT&T, Gerard Lane, equity strategist at Shore Capital, said, once its disposal of its stake in Verizon Wireless had gone through.

“We’d had comments attributed to AT&T suggesting that Vodafone was being looked at. The non-Verizon (NYSE: VZ – news) element of Vodafone looks undervalued on a EBITDA basis, so people could justify a potential AT&T take-out on a higher premium than the ex-Verizon Vodafone was trading on,” Lane said.

“Now that’s been kiboshed, it’s understandable why investors have reacted as they have.”

That drop alone took 25 points off the British blue-chip index, while BG Group contributed another 24 points to the drop.

Its shares fell 14.7 percent – on track for their worst day since 1987 – after the company warned that production this year and next would fall short of expectations, calling its guidance for 2014 “disappointing” due to ongoing problems in Egypt.

The FTSE 100 was down 94.49 points, or 1.4 percent at 6,569.25 points by 1158 GMT, following on from a 2.4 percent fall last week.

The drop in the FTSE took the index down to fresh 5-week lows, and past technical support at the 100-day moving average.

Weakness in recent sessions has been triggered by turmoil in emerging markets, which has knocked stocks around the globe, with fears that developed market earnings could be impacted by weakness in EM currencies.

“The question is whether the demand from developed market economies is going to outweigh a currency impacted revenue line, and I expect it probably won’t,” Shore Capital’s Lane said.

The steepness of the sell-off has seen the index drop from technically overbought conditions, according to the 7-day relative strength indicator (RSI), into oversold territory in less than a week.

The index bounced off lows at the 200-day moving average around 6,555.65 points, which was highlighted by Clive Lambert, an analyst at Futures Techs, as a key support area.

However, technical charts suggest there is scope for future weakness, given that the selloff started when the index was less than 10 points away from the May 2013 high, and less than 100 points from all-time peaks.

“The fact that we failed at such a key resistance level and then saw a significant pullback from there, that has to make you think that there could be more downside to come,” Lambert said.