Third day of red as miners and banks lose their appeal

<!--StartFragment--> THE FTSE 100 dropped 2.1 per cent yesterday, succumbing to disappointing US retail sales figures, profit-taking in the banking sector and mining stocks weighed down by weak commodity prices. The index retreated for the third day in a row, closing at 4,331.37, or 94.17 points down.<br /><br />&ldquo;Despite the change of tone, markets have more room to manoeuvre thanks to the startling rally from the lows of March,&rdquo; said market analyst David Evans. &ldquo;A quick slump back towards the recent lows could catch many unaware after weeks of steady gains.&rdquo;<br /><br />Banks were the biggest drag, amid profit taking in a sector that has jumped nearly 103 per cent since its trough in early March. <strong>HSBC, Standard Chartered, Barclays</strong> and <strong>Lloyds Banking Group</strong> fell 5.1 to 9.6 per cent. <strong>Royal Bank of Scotland</strong> slid 12.6 per cent after the part-nationalised bank&rsquo;s chief executive said it faced serious net margin headwinds.<br /><br />Miners were also lower, tracking weak commodity prices. <strong>Kazakhmys, Eurasian Natural Resources , Anglo American</strong> and <strong>BHP Billiton</strong> fell 5.3 to 11.9 per cent. <strong>Rio Tinto</strong> closed 10.6 per cent lighter as its major investors demand afresh that the mining giant scrap a deal with Chinalco and actively pursue a new capital raising or a sale of assets to rival BHP.<br /><br />Oils were broadly higher with crude up prices holding up. <strong>BG</strong> and <strong>Royal Dutch Shell</strong> added 0.3 per cent and 1.6 per cent respectively, but BP underperformed, down 1.3 per cent after going ex-dividend.<br /><br />Like the banks, life insurers were under pressure as investors favoured defensives. <strong>Aviva, Friends Provident, Legal &amp; General, Prudential</strong> and <strong>Standard Life</strong> fell 1.7 to 11 per cent.<br /><br />Meanwhile, investors switch back to defensive stocks such as cigarette makers, food producers and drugmakers. <strong>British American Tobacco, Unilever</strong> and <strong>Shire</strong> added between 1.5 and 2.8 per cent.<br /><br />But shares in <strong>J Sainsbury</strong>, also deemed as defensive, fell back, closing down 1.5 per cent, as analysts said a slightly better-than-expected rise in full-year profit from the grocer was already factored into a stock price which has a higher valuation than many peers.<br /><br /><strong>Land Securities</strong> was the biggest FTSE 100 faller, down 13.2 per cent, after Britain&rsquo;s biggest property company, said the value of its portfolio fell $7.1bn.<br /><br />With <strong>BT</strong> due to kick off telecoms reporting season this morning, today could be marked by nervousness around the sector&rsquo;s stocks.