The blue-chip FTSE 100 index was down 1.1%, underperforming its European peers, and posted its first weekly decline in three weeks.

Bank stocks including HSBC holdings, Barclays and Lloyds Banking fell between 0.7% and 2.4% after U.S. Treasury yields retreated from a 14-month high. [US/]

Mining stocks including Rio Tinto, Anglo American and BHP, were among the biggest drags on the index, while oil heavyweights BP and Royal Dutch Shell also fell, tracking a fall in oil and metal prices. [O/R] [MET/L]

"We have seen a bit of a dip in Treasury yields that has taken some of the shine off the banking sector and all the mining and oil companies are suffering from the volatility in commodity prices," said David Madden, analyst at CMC Markets.

The domestically focused FTSE 250 index fell 0.7%, dragged down by industrials stocks.

While optimism about a British economic recovery has seen the mid-cap index trading close to highs scaled before the coronavirus pandemic, the FTSE 100 has fallen behind due to its sensitivity to international markets, particularly commodity prices, sterling and U.S. Treasury yields.

In Britain, data showed consumer morale jumped to a one-year high in March as the public became increasingly confident of a strong economic rebound from the COVID-19 pandemic.

Pub operator J D Wetherspoon fell 2.3%, after posting a half-yearly loss, compared with a year-earlier profit, as hundreds of its pubs across Britain were shuttered through the key holiday season due to coronavirus restrictions.

(Reporting by Shivani Kumaresan and Amal S in Bengaluru; Editing by Ramakrishnan M., Subhranshu Sahu and Alex Richardson)

By Amal S