By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- After a choppy session, the U.K.'s FTSE 100 index fell sharply on Monday, with concerns about banks and oil firms outweighing optimism over better-than-expected U.K. manufacturing data.

The benchmark index dropped 0.9% to close at 6,487.97, marking its first loss in five days. Last week, the FTSE closed with the biggest weekly advance since February.

On Monday, heavyweight bank HSBC Holdings PLC (HSBC) skidded 1.8% after setting aside around $1.7 billion to cover one-off charges, such as legal settlements and compensation to customers.

Shares of Royal Bank of Scotland Group PLC (RBS) dropped 2% after Investec cut the bank to sell from hold.

Oil firms were also lower, as oil prices declined. BP PLC (BP) lost 1.2%, Royal Dutch Shell PLC (RDSB) fell 1.3% and BG Group PLC erased 0.4%.

On a more upbeat note, shares of easyJet PLC added 2.7% and International Consolidated Airlines Group SA (ICAGY) gained 1.3% after rival airliner Ryanair Holdings PLC lifted its full-year profit guidance and reported a rise in second-quarter earnings. Ryanair shares leapt 7.7% in Dublin.

In data news, the U.K. manufacturing purchasing managers index -- a gauge of factory activity -- rose to a three-month high in October, led by stronger domestic demand.

Also read: European stocks pull back

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