Miners and banks drag down FTSE

By Atul Prakash

LONDON (Reuters) - The top share index closed 1.3 percent lower on Tuesday, driven down by sharp falls in heavyweight commodity stocks that tracked crude and metal prices lower, while banks continued to struggle.

The commodity-heavy FTSE 100 .FTSE was down 72.2 points at 5,440.5 after gaining 1.9 percent on Monday. The benchmark index has fallen about 16 percent this year.

Mining shares slipped with a decline in key base metals prices, and oil shares fell sharply after crude prices slid nearly 4 percent.

BP (BP.L) lost 3.4 percent, Royal Dutch Shell (RDSa.L) dropped 2.3 percent and gas producer BG Group (BG.L) slipped 4.4 percent.

Banks, the sector worst hit by a global credit crisis that has slowed the global economy and led to massive writedowns and capital increases, remained in the doldrums.

Barclays (BARC.L), Royal Bank of Scotland (RBS.L), HSBC (HSBA.L), HBOS HBOS.L, Lloyds TSB (LLOY.L), Alliance & Leicester ALLL.L shed between 1.0 and 2.8 percent.

Analysts feared the economy could slide into a recession, with the British Chambers of Commerce saying that unemployment could rise by as much as 300,000 by the end of 2009.

Latest economic figures also painted a grim picture for the U.S. economy. Data showed on Tuesday that pending sales of previously-owned U.S. homes plummeted 4.7 percent in May, against economists' expectations of a 2.8 percent fall.