FTSE off 2.1 percent on weak U.S. data

By Tricia Wright

LONDON (Reuters) - The top share index closed down 2.1 percent on Wednesday, succumbing to disappointing U.S. retail sales figures, banks knocked by profit taking and mining stocks weighed by weak commodity prices.

The FTSE 100 ended down 94.17 points at 4,331.37, retreating for the third straight session.

The benchmark index is down 2.3 percent so far this year, but up 25.2 percent since hitting a six-year low on March 9.

"What you're seeing here is just a bit of a setback in terms of profits being taken, because after a big run like this, does it spell a complete reversal, or a start of a reversal of the movement we've enjoyed since March?" said Stephen Pope, chief global market strategist at Cantor Fitzgerald Europe.

"My view is still 'no it doesn't'. We are still in a relatively decent technical position," he said.

U.S. blue chips fell after U.S. retail sales data came in worse than expected, dampening hopes of a quick economic recovery.

UK economic news was also gloomy, with the Bank of England's quarterly inflation report saying growth would shrink sharply in coming months before recovering at a slower pace than previously thought.

Banks were the biggest drag on the UK blue chips, amid profit taking in a sector that has jumped nearly 103 percent since its trough in early March. At the same time, investors switched into more defensive stocks.