<!--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 />“Despite the change of tone, markets have more room to manoeuvre thanks to the startling rally from the lows of March,” said BetOnMarkets.com market analyst David Evans. “A quick slump back towards the recent lows could catch many unaware after weeks of steady gains.”<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’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 & 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’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’s stocks.