By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- Banks led U.K. stocks lower on Tuesday, with Barclays PLC posting one of the biggest losses after being named in a lawsuit on alleged manipulation of gold prices.

The FTSE 100 index dropped 0.1% to close at 6,685.52, marking a third straight session of losses.

Shares of Barclays PLC (BCS) dropped 2.4%. According to The Wall Street Journal, AIS Capital Management has filed a lawsuit against the five banks that set the London gold fix, which includes Barclays, claiming that the banks conspired to rig gold prices. The legal action follows another lawsuit by New York trader Kevin Maher, who also has alleged the banks manipulated the price benchmark.

HSBC Holdings PLC (HSBC) , which was also named in the lawsuits, nudged up 0.2%. According to The Wall Street Journal, the bank will sell as much as 2 billion euros ($2.7 billion) of private-equity fund stakes on the secondaries market.

Among other U.K. banks, Royal Bank of Scotland Group PLC (RBS) dropped 3% and Lloyds Banking Group PLC (LYG) slipped 0.5%.

In U.K. data news, the Office for National Statistics said industrial-production growth slowed in January as severe weather hurt the North-Sea oil and gas extraction and a sharp fall in production of pharmaceutical product. Industrial production rose 0.1% in January, missing analyst expectations and slower than the 0.5% December growth rate.

The British Retail Consortium said year-on-year same-store sales fell 1% in February, while total sales improved 0.7%. Shares of do-it-yourself retailer Kingfisher PLC dropped 1%, while Marks & Spencer Group PLC fell 0.3%.

Shares of Tesco PLC lost 1.8% after data from Kantar showed the supermarket chain's market share fell to the lowest level since 2004.

Also in the spotlight in London on Tuesday, Bank of England Governor Mark Carney defended the bank's forward-guidance framework on interest rates in testimony to the Treasury Committee.

"I have no regrets that we're sitting here in March with more than half a million more people in work," Carney said.

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