Financials drive FTSE 100 down as anxiety grips European investors

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* FTSE 100 down 0.8 pct

* Financials, miners drive FTSE down in cyclical slump

* Set for worst week in two months

* Standard Life Aberdeen bottom of FTSE 100

By Helen Reid

LONDON, June 8 (Reuters) - Britain's leading stock index tumbled on Friday, following the lead of European shares in a broad sell-off as investors were spooked by the prospect of a tightening of financial conditions and political risk.

The FTSE 100 sank 0.8 percent while Germany's DAX dropped 1.4 percent and Italy's FTSE MIB fell 1.5 percent.

The index was set for its third straight week of losses and its worst week in more than two months.

Risk appetite has dried up this week as investors in Europe warily eyed the new Italian government and the European Central Bank indicated it could end ultra-loose monetary policy earlier than expected.

Stark divisions on trade ahead of a G7 leaders' summit kicking off on Friday 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," he added.

On Friday financials were the biggest drag on the FTSE 100, selling off sharply with HSBC, Prudential (SES: K6S.SI - news) , Lloyds and Barclays (LSE: BARC.L - news) falling 0.5 to 1.3 percent.

Energy and mining stocks also sank as investors shed all the sectors seen as most exposed to the business cycle.

Antofagasta (Other OTC: ANFGF - news) , Fresnillo (Frankfurt: A0MVZE - news) , Anglo American (LSE: AAL.L - news) , BHP Billiton (NYSE: BBL - news) , and Glencore (Frankfurt: 8GC.F - news) fell 1.5 to 3.1 percent while oil majors BP and Royal Dutch Shell (LSE: 0LN9.L - news) dropped 0.8 to 1 percent.

Standard Life Aberdeen shares dropped 3.5 percent, the worst faller on the FTSE 100 after Lloyds Banking (Xetra: 871784 - news) sold its remaining stake in the asset manager.

The sell-off took the FTSE 100 to its lowest in more than a week. Having underperformed European stocks since the June 2016 Brexit vote, it has come back to strength recently, though the past three weeks have driven renewed volatility.

The one silver lining on Friday was telecoms firm BT which outperformed the market, up 0.6 percent, after saying CEO Gavin Patterson would step down later this year after a poorly received recovery plan.

Auto Trader (Frankfurt: 2UA.F - news) shares also gained 2.3 percent on the mid-cap index, extending its rally since reporting results on Thursday, as brokers increased their ratings on the stock.

Kaz Minerals (LSE: KAZ.L - news) dropped to the bottom of the FTSE 250, down 6.5 percent while mining peers Hochschild and Centamin (Frankfurt: A1JPZ6 - news) also fell 2.5 to 3 percent.

(Reporting by Helen Reid; Editing by Jon Boyle)