* FTSE 100 down 0.3 pct, third straight week of losses
* Financials, miners drive FTSE down in cyclical slump
* Inmarsat jumps 13.5 pct, confirms takeover approach after close
* Standard Life Aberdeen bottom of FTSE 100 (Updates prices, adds details)
By Helen Reid
LONDON, June 8 (Reuters) - Britain’s leading stock index fell on Friday, tracking a broad sell-off by European shares as investors faced the prospect of tightening financial conditions and growing political risk.
The FTSE 100 closed down 0.3 percent for its third straight week of losses. Germany’s DAX dropped 0.4 percent and Italy’s FTSE MIB sank 1.9 percent.
Risk appetite has dried up this week a new Italian government settled in and the European Central Bank indicated it might end ultra-loose monetary policy earlier than expected.
Divisions on trade as G7 leaders’ summit got under way added to investors’ anxieties.
“Events going on that people point to, such as the G7 meeting, are all idiosyncratic things that have their impact, but I think often what you see is a broader story underneath that is affecting everything and is probably exacerbating those situations,” said Clark Fenton, chief investment officer at Agilis Investment Management. “I think it comes back to quantitative tightening.”
On Friday financials were the biggest drag on the FTSE 100, as HSBC, Prudential, Lloyds and Barclays fell 0.3 to 1.2 percent.
Mergers and acquisitions drove the UK market. Satellite firm Inmarsat surged on takeover speculation to end the day 13.5 percent higher at the top of the FTSE 250.
After trading hours, the company confirmed U.S. firm Echostar had made an acquisition proposal, which its board rejected on the grounds that it “significantly undervalued” Inmarsat.
Energy and mining stocks also fell as investors shed all the sectors seen as most exposed to the business cycle. Gold miner Fresnillo led the selloff, tumbling 6.4 percent to the bottom of the FTSE 100.
Antofagasta, Anglo American, and Glencore fell 1.7 to 3.2 percent. Oil majors BP and Royal Dutch Shell dropped 0.6 to 1 percent.
Mid-cap miners Kaz Minerals, Hochschild and Centamin fell 3.2 to 8.2 percent.
The FTSE 100 hit its lowest in more than a week in early trading, but recovered during the day. It briefly turned positive as sterling fell after the European Union’s chief Brexit negotiator, Michel Barnier, called the UK’s approach to future trade “fairly paradoxical”.
Dollar-earning stocks, which benefit from a weaker sterling, were the best performers. Diageo, Unilever, Reckitt Benckiser and British American Tobacco rose 0.3 to 2.1 percent.
Standard Life Aberdeen shares dropped 3.5 percent, the biggest decline on the FTSE 100, after Lloyds Banking sold its remaining stake in the asset manager.
Apart from Inmarsat, another silver lining on Friday was telecoms firm BT. It outperformed the market, rising 1 percent, after saying CEO Gavin Patterson would step down later this year after a poorly received recovery plan.
Mid-cap Auto Trader jumped 8.3 percent, extending its rally since reporting results on Thursday, as brokers raised their ratings on the stock.
Reporting by Helen Reid; Editing by Larry King