By Atul Prakash

LONDON (Reuters) – British blue chip shares fell on Monday, with energy providers hit by concerns they may be forced to break up their businesses, while weak Chinese economic data hurt miners.

International Consolidated Airlines Group, which owns British Airways and Iberia, fell 2 percent, making it the top decliner on the FTSE 100 index, after Morgan Stanley removed it from its “Europe Best Ideas” list.

The investment bank said it preferred low-cost carriers as they had scope to outperform.

The FTSE 100 index was down 0.4 percent at 6,530.99 points by 1130 GMT and has now fallen for nine of the past 12 trading sessions, pulling it down more than 4 percent this month.

Housebuilder Barratt Developments fell 1.9 percent on a downgrade by Davy Research to “neutral” from “outperform”.

The FTSE 100 is down about 3 percent since the start of the year after gaining 14 percent in 2013.

Overall market sentiment remained fragile due to persistent geopolitical tensions in Ukraine and the prospect of slower growth in China following a lower-than-expected Chinese purchasing managers index. However, the Chinese data also started fresh speculation that Beijing could launch new stimulus.

“Some caution is still required given concerns about a growth slowdown in China and what’s going on in Ukraine,” Keith Bowman, equity analyst at Hargreaves Lansdown, said.

“We are seeing signs of a slowing Chinese economy. But weaker economic indicators also raise hopes that the authorities will take further action to help stimulate growth. That explains why losses in mining stocks are limited today.”

Miners Randgold Resources, Antofagasta and BHP Billiton were down 0.3 to 1.5 percent.

Energy firms fell on concerns of a break-up. SSE and Centrica dropped 1.9 percent and 1.5 percent respectively after the Sunday Times said the Competition and Markets Authority could force big energy firms to separate their power-generation and retail arms.

“A break-up of generation and retail wouldn’t do anything (to gas prices) but increase the cost of operations,” Ingo Becker, an analyst at Kepler Chreuvreux, said.

“Fundamentally, the fear is probably that the break-up is going to be tied to something even worse, (such as) a break-up of the big six into the medium 12.”

Charts also indicated that the FTSE 100 index could face further selling pressure in the near term after falling below its 200-day moving average last week.

“The technical picture does suggest that the FTSE might not be finished with its test of support and that we could soon be seeing a further exploration of the recent lows, at 6,492, which could lead to a test of the bottom created last month at 6,449,” Bill McNamara, technical analyst at Charles Stanley, said.

“In short, we’re not out of the woods yet.”

Among other movers, plumbing supplies group Wolseley, fell 1.3 percent on caution ahead of its results on Tuesday, with investor focus shifting to its margins at its U.S. business and outlook on 2014 profitability.

(Additional reporting by Francesco Canepa; Editing by Susan Fenton)