Commodities led the top share index lower by midday on Monday, dragged by Japan's intervention on the yen and worries over demand from China, while retailers waned on concerns over the outlook for consumer spending.

Mining <.FTNMX1770> and integrated oil <.FTNMX0530> stocks fell in tandem with commodities and took more than 33 points off the UK's benchmark index, after Japan intervened to tame the high-flying yen to counter excessive speculation that was hurting the world's No. 3 economy.

The move strengthened the greenback, making dollar-denominated commodities more expensive for buyers holding other currencies.

The intervention was predictable and has weighed on commodities and the related stocks, but we've seen this before from Japan in August and it remains to be seen whether this phase of intervention will work any better than the last, Jimmy Yates, head of equities at CMC Market, said.

Heavyweight oil major BP fell 0.7 percent, while Vedanta was the top faller among the miners, down 6.7 percent.

Also hitting the miners were concerns over demand from Asia, with China's steel industry association saying the country is still unwilling to buy iron and stockpiles of expensive ores remain stubbornly high.

There was an element of profit taking involved too as the trading month draws to close. Both sectors have gained more than 14 percent in the month as hopes grew of a solution to Europe's debt crisis, which boosted appetite for risk.

Britain's FTSE 100 <.FTSE> fell 61.86 points or 1.1 percent to 5,640.38 by 12:00 p.m., but remains on course for its biggest monthly gain in more than 19 years.

RETAILERS WOE

Domestic-focussed retailers were under pressure, with small cap JJB Sports down 19.3 percent after the British retailer warned on its full-year outcome.

Panmure Gordon, which downgraded its rating on JJB to hold from buy as well as cutting its target price and estimates, said the company should be able to continue to fund the business but its new forecasts require a sales recovery in December and January.

FTSE 250 UK retailers also suffered with Mothercare , Halfords and Supergroup down as much as 5 percent as Goldman Sachs cut its respective ratings on the firms on concerns over their exposure to European household consumption expenditure.

FTSE 100-listed retailer Marks & Spencer shed 1.3 percent, while Next was down 1.7 percent.

Elsewhere, mid cap firm HomeServe slumped more than 30 percent as the emergency repair and insurance group suspended all telephone sales following a review into whether some of its staff could have been mis-selling products.

Banks <.FTNMX8350>, which have gained more than 14 percent in October, fell as risk appetite faded, with Royal Bank of Scotland down 1.0 percent.

Barclays swung lower despite reporting that underlying quarterly profit rose 5 percent from a year ago as lower charges for bad debt at the British bank offset a third consecutive sharp fall in investment banking revenue.

Sentiment was further impacted as investors began focussing on the detail of the plan put forward by European leaders last week to contain the region's debt crisis, in particular how the extended European Financial Stability Facility (EFSF) would be funded, ahead of the G20 summit starting on Thursday.

EFSF Chief Executive Klaus Regling could not convince Japan, which is concentrating on the state of its own economy, to commit to putting cash into a mooted special purpose vehicle to enhance the rescue fund's firepower.

Helping depress the FTSE, U.S. stock index futures pointed to a weaker open for equities on Wall Street ahead of data including regional business activity and manufacturing activity for October.

On the upside, defensive stocks performed well as investors switched into equities that tend to perform better in austere times.

Utilities International Power , National Grid and GlaxoSmithKline rose as much as 1.4 percent.

Telecoms firm BT Group added 1.2 percent ahead of second-quarter results on Thursday.