By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- The U.K.'s FTSE 100 index kicked off August on a downbeat note and closed at the lowest level in three weeks on Friday, as investors continued to move out of risky assets against a background of geopolitical concerns.

The benchmark index slumped 0.8% to end at 6,679.18, for a third straight day in the red. On the week, the index closed 1.7% lower.

Risk-sensitive sectors, such as banks and miners, posted some of the biggest losses as investors remained wary of the fallout from tougher sanctions on Russia, Argentina's selective default, fighting between Israel and Hamas in Gaza and a broader risk-off sentiment triggered earlier in the week.

In London, mining firms declined on Friday, ignoring better-than-expected manufacturing data from China. Shares of Glencore PLC dropped 1.1%, Rio Tinto PLC (RIO) lost 1.1%, and BHP Billiton PLC (BHP) fell 0.9%.

Banks were also lower, with shares of Royal Bank of Scotland Group PLC (RBS) moving 1.5% lower as the bank's Chief Executive Ross McEwan said it's working to wind down issues that include "significant conduct and litigation issues that will likely hit our profits going forward." Legal issues include an international probe into possible foreign-exchange market manipulation. Investec Securities analyst Ian Gordon on Friday cut the bank to sell from hold.

Shares of heavyweight HSBC Holdings PLC (HSBC) fell 1.1%, Lloyds Banking Group PLC (LYG) erased 1.2% and Standard Chartered PLC slipped 0.8%

Capita PLC gave up 1.8% after Credit Suisse cut the business-services company to neutral from outperform.

Shares of GlaxoSmithKline PLC (GSK) erased 1.4% after Moody's Investors Service downgraded the drug maker's long-term issuer rating to A2 from A1. Moody's cited to reasons for the move: a deterioration of GSK's credit profile over the past 6 months and a put option granted to Novartis AG .

On a more upbeat note, shares of International Consolidated Airlines Group SA rose 2.2% after the airline and British Airways parent reported a jump in second-quarter profit.

In data news, the U.K.'s manufacturing purchasing managers' index showed the sector slowed more than expected in July and expanded at the slowest pace in a year.

Rob Wood, chief U.K. economist at Berenberg, said in a note that the weakness in July was "probably in response to escalating Ukrainian tensions and mediocre euro-zone growth."

He also noted that this was the lowest reading since U.K. growth surged last summer, which "raises questions about whether the recent rapid pace of expansion can be sustained in the second half of the year."

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