LONDON MARKETS: Banks Drive U.K. Stocks Lower After Cyprus Rescue

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- Banks and resource firms drove London's benchmark stock index lower on Monday, as a levy on bank deposits in Cyprus stoked fears of bank runs.

The FTSE 100 index lost 0.8% to 6,439.43.

Among banks on the decline, shares of Barclays PLC ( BCS ) shaved off 3.6%, Royal Bank of Scotland Group PLC (RBS) gave up 3.5% and Lloyds Banking Group PLC fell 1.9%.

   Heavyweight HSBC Holdings PLC  ( HBC )   slipped 0.4%.

The losses came after Cyprus over the weekend agreed to a 10 billion euro bailout ($12.9 billion), which included an unprecedented levy on bank deposits. It's the first time in the euro-zone crisis that depositors would lose money, raising fears that other national governments could do the same thing. See: Cyprus bailout comes at a cost to bank depositors

Other sectors sensitive to economic and financial conditions, such as oil and mining firms, were also among biggest fallers in the U.K.

Shares of miner Kazakhmys PLC gave up 3.2%, Anglo American PLC dropped 1.7% and Rio Tinto PLC (RIO) lost 0.9%. Most metals prices were lower.

Oil major Royal Dutch Shell PLC (RDSB) fell 0.6% and BG Group PLC shed 0.3%. Oil prices (CLJ3) traded below $93 a barrel.

On a more upbeat note, shares of Marks & Spencer Group PLC gained 7.7%, after The Sunday Times reported that a Qatar wealth fund was mulling a bid for the U.K. retailer. A source close to the fund, however, later denied that a bid is on the way, according to news reports. A representative from Marks & Spencer declined to comment.

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