(Reuters) -British stocks fell on Friday as anxious investors poured capital into safe-haven assets after sources said Israel launched an attack on Iranian soil, while domestic retail sales stagnated for March.

The globally-focussed FTSE 100 declined 0.6% by 8:32 GMT. It is down 2.3% so far this week, set for its worst week in three months.

The mid-cap FTSE 250 lost 0.9%, poised for a third consecutive week of declines.

Nearly all sub-indexes traded in the red. Retailers and personal goods lost 1.4% each and were among the top losers, JD Sports led declines among retailers, down 3%.

Meanwhile, the pound was flat, hovering near five-months lows against the dollar as data showed UK retail sales stagnated in March representing the first time that sales have not grown in monthly terms since December.

The 10-year UK bond yield ticked slightly higher to 4.267%.

Investors are also on edge due to uncertainties surrounding Iran's next moves, compounded by significant concerns over inflation and interest rate volatility.

Travel and leisure stocks fell 0.8%, as airlines scrambled to divert flights over Iran.

"The retaliation of Israel coming through overnight is a bit of a risk off environment but UK markets are doing a bit better because of their energy exposure and haven't been priced for a Goldilocks scenario," said Thomas Gehlen, senior market strategist at SG Kleinwort Hambros.

Among individual stocks, bookmaker 888 gained 4.0% after reporting first-quarter revenue slightly ahead of its expectations, helped by strong customer volumes and expects revenue to return to growth from the second quarter.

Zotefoams rose 4.9% after the firm entered into exclusive deal with Design Blue Limited to develop impact protection solutions for defense & law enforcement sectors.

(Reporting by Pranav Kashyap in Bengaluru; Editing by Savio D'Souza and Varun H K)

By Pranav Kashyap and Khushi Singh