FTSE: 5,384.68 (–64.81) Mid-250: 10,111.14 (–120.69) Small Cap: 2,774.75 (–33.53)UK STOCKS retreated for the third time in four days yesterday, led by a sell-off in banks and mining companies amid concern European leaders are far from agreeing on a solution to containing the region's debt crisis.

The FTSE 100 Index lost 1.2 per cent at the close in London.

“You’ve got an incredibly uncertain outlook in Europe,” George Godber, a London-based fund manager at Matterley, said. “We are stuck in the risk-on, risk-off roundabout that won’t get resolved until Europe shows some sort of clarity.”

The FTSE 100 had advanced for the past three weeks, amid optimism that European policy makers would devise a plan to help solve the debt crisis that has Greece teetering on the edge of a default. Even so, the benchmark gauge has slumped 12 per cent from this year’s high in February.

France and Germany disagreed over the European Central Bank’s role, threatening to hinder progress on the rescue strategy that global policy makers have demanded.

Finance ministers will meet today before a full euro-area summit in two days time.

Barclays paced the sell-off in banks, tumbling 4.2 per cent to 172p. Lloyds sank 4.5 per cent to 31.65p and Royal Bank of Scotland retreated 3.4 per cent to 23.63p.

Mining companies retreated as copper and zinc led a decline among base metals amid political wrangling in Europe.

Rio Tinto, the world’s second-largest mining company, lost 3.9 per cent to 3,015p.

Xstrata declined 3.3 per cent to 895.8p and Vedanta Resources slid 3.6 per cent to 1,132p.

Anglo American slid, falling 4 per cent to 2,280.5p, as the company said third-quarter copper output decreased 9 per cent.

Fresnillo, the world’s largest primary silver producer, dropped 3.7 per cent to 1,498p.

Petropavlovsk gained 1.9 per cent to 688p as the Russian gold miner reported a 65 per cent jump in third-quarter output after production increased at its Pioneer site.

Debenhams surged 7.7 per cent to 67.6p, its highest price in three months.

Marks and Spencer, a clothing retailer, gained 1.1 per cent to 332.6p and Home Retail, which tumbled 17 per cent on Wednesday, climbed 3.9 per cent to 103.4p. – (Bloomberg)