By Barbara Kollmeyer

MADRID (MarketWatch) -- The U.K. benchmark stock index dropped on Friday, breaking a two-session winning streak, as mining and oil firms led the market lower and despite gains for some other European markets.

The FTSE 100 index fell 0.2% to 5,749.94 in afternoon trading in London. U.S. stocks struggled for positive ground at the open.

The index rose 0.5% on Thursday to end at 5,757.86, its highest closing value since April 20. It's gained nearly 4% so far in October.

While a test of the year-to-date highs on the FTSE remain a possibility, traders appear to be "pausing for breath," said Anthony Grech, head of research at IG Index. "With little fundamental data due for release today (Friday), the temptation is probably to start unwinding ahead of the weekend break," he said.

"The big risk for the FTSE does, however, seem to be its over-weighting of the mining stocks and with the fortunes of the sector now clearly being dictated by monetary policy out of Beijing, any further attempts to rein in Chinese economic growth could have a very marked effect here in London," said Grech.

China lifted interest rates this week in a surprise move. Any attempts to cool growth are largely viewed as negative for resource-related stocks because of expectations that China would be seeking fewer raw materials.

Investors are closely watching all data that come out of China. See miners could be a risky short-term bet

The meeting of Group of 20 finance ministers and central bankers underway in Seoul was also a factor on Friday, as the U.S. dollar rose on tensions ahead of that meeting.

Miners stayed weak in London. Eurasian Natural Resources fell 2%, Lonmin PLC lost 2.3% and Vedanta Resources PLC dropped 2%.

Oil stocks turned around earlier losses, as December crude futures gained 81 cents to $81.38 a barrel. Shares of Essar Energy PLC rose 2.3%.

Banks also pushed higher, after spending much of the day in negative territory, though that didn't help the main index much. Royal Bank of Scotland Group PLC (RBS) rose 2.6%, and Lloyds Banking Group PLC added 2.5%.

TUI Travel PLC was a top gainer, up 3%, after suffering heavy losses Thursday on news it will restate 2009 earnings and its chief financial officer is stepping down.

Citigroup downgraded its recommendations on TUI Travel and Thomas Cook PLC to hold, saying the tour operators face the dangers of low growth and capacity risk. Shares of Thomas Cook fell 1.7%.

Shares of British Sky Broadcasting Group PLC edged up 0.4% after the firm reported a 78% rise in profit for the fiscal first quarter. Revenue for the group topped forecasts.

Meanwhile, online sports-betting group Betfair priced its initial public offering at 1,300 pence on Friday, with shares set to begin officially trading on Oct. 27. That was at the top of its 1,100 to 1,400 pence planned range.

Conditional trading began on Friday and David Buik, strategist at BGC Partners, said prices pushed to around 1,539 pence.

 
 
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