THE FTSE 100 dropped 0.6 per cent yesterday, led by banks after a trading update from <strong>Standard Chartered</strong> failed to excite investors while commodity stocks were also under pressure. The index closed down 27.41 points at 4,252.57, after gaining 1.2 pe rcent in the previous session. <br /><br />Banks shaved most points off the index after Asia-focused Standard Chartered said it remained cautious on its outlook, with consumer banking income for the first half expected to be lower than the previous six months and bad debts rising sharply in the division. Standard Chartered stock lost 2.3 per cent, while <strong>HSBC</strong>, which also has a large presence in Asia, dropped 2.4 per cent. <strong>Lloyds Banking Group</strong> and <strong>Barclays</strong> gave up 0.4 and 1.6 per cent respectively.<br /><br /><strong>Royal Bank of Scotland</strong>, however, added 3.4 per cent after Cazenove raised its rating on the bank to “outperform” from “underperform”.<br /><br />The US economy shrank slightly less in early 2009 than previously thought, though there was widespread weakness in activity and demand was soft.<br /><br />“It’s going to be a very rocky time for investors. It will confirm our long held view that over the course of the last few months, the market has just gone too far ahead of itself,” said Peter Dixon, economist at Commerzbank.<br /><br />Commodity stocks were other standout losers on the UK index, with <strong>BP, Royal Dutch Shell, Xstrata, BHP Billiton</strong> and <strong>Rio Tinto</strong> down between 0.2 and 2.4 per cent.<br /><br /><strong>Tullow Oil</strong> bucked the trend, up 2.1 per cent with traders pointing to speculative interest following recent takeover deals for oil explorers, notably its Ugandan field partner Heritage Oil.<br /><br />Index heavyweight <strong>Vodafone</strong> fell 1.3 per cent after Goldman Sachs removed the mobile phone operator from its “conviction buy list” and downgraded the European telecoms sector to “neutral” from “attractive”.<br /><br /><strong>BT Group</strong> and <strong>Cable & Wireless</strong> both lost 0.4 per cent.<br /><br />On the upside, <strong>Standard Life</strong> advanced 2.4 per cent after Bank of America-Merrill Lynch upgraded its rating on the life insurer to “buy” from “neutral”.