LONDON (Reuters) - The leading share index slipped 0.3 percent on Tuesday as Royal Bank of Scotland (LSE: 90ID.L - news) <RBS.L> led banks lower after unveiling a hefty rights issue, while mining shares rose on strong metal prices.

The FTSE 100 <.FTSE> ended down 18.3 points at 6,034.7.

European markets and stocks on Wall Street also fell.

RBS (LSE: RBS.L - news) lost 3.9 percent after revealing a record 12 billion pound rights issue to cover increased writedowns on the value of toxic assets and help repair one of the sector's most stretched balance sheets.

The second biggest bank said it would also sell assets to generate 4 billion pounds in core capital this year, mostly from the possible disposal of all of or a stake in its insurance arm, which includes brands Direct Line and Churchill (CUQ.TO - news) .

Other banks to fall included HBOS <HBOS.L>, Barclays (LSE: BARC.L - news) <BARC.L> and Lloyds TSB <LLOY.L>.

"Bad day for banks," said Mark Priest, senior trader at TradIndex. "Rumours abound that other banks are going to follow suit."

"In America whether they (banks) announce a big loss the market rallies, and yet (not) over here...I don't know whether it's one of these 'buy the rumour sell, the fact' scenarios."

"It (Frankfurt: A0MLX5 - news) 's really quiet," he said about the market in general, adding: "It does seem as though people have taken a step away."

The RBS news comes one day ahead of the bank's annual general meeting and just one day after the Bank of England's offer to swap government bonds worth 50 billion pounds for banks' riskier mortgage debt in an effort to ease the effects of a credit crunch on the banking system.

Bucking the downward trend, mining stocks rose as metal prices firmed. BHP Billiton (LSE: BLT.L - news) <BLT.L>, Rio Tinto (Frankfurt: 855018 - news) <RIO.L>, Kazakhmys (LSE: KAZ.L - news) <KAZ.L> and ENRC <ENRC.L> shed 2-8.7 percent.

Oil shares were also mostly higher as world oil prices rose to hit a record high of $118.85 a barrel. BP <BP.L> traded 0.4 percent higher, Cairn Energy (LSE: CNE.L - news) <CNE.L> firmed 1.2 percent and Tullow Oil (Dublin: TQW.IR - news) <TLW.L> rose by 1.5 percent.

"We have now broken $18. I can't see us stopping unless OPEC suddenly open the oil floodgates and I can't see that happening," said TradIndex's Priest.

Shares in energy firm Centrica (LSE: CNA.L - news) <CNA.L> also featured on the upside, gaining 1.5 percent on the back of market talk that Warren Buffett's Berkshire Hathaway <BRKa.N> investment group was building a stake in the company, traders said.

Centrica declined to comment.

Among decliners, food and beverages stocks fell across the board with Associated British Foods (LSE: ABF.L - news) <ABF.L> slipping 2.1 percent after the owner of Primark discount clothes stores and Silver Spoon sugar refiner posted a 5 percent rise in first-half profit and said economic conditions were difficult.

Sugar producer Tate & Lyle <TATE.L> lost 3.1 percent.

Housebuilding stocks fell after Merrill Lynch (NYSE: MER - news) cut its 2008 volume expectation to a 25 percent drop from a 15 percent fall, expecting no volume growth in 2009 compared with its previous 5 percent growth expectation.

Persimmon (LSE: PSN.L - news) <PSN.L> fell 5.3 percent and Taylor Wimpey (LSE: TW.L - news) <TW.L> dipped 5.6 percent while Barratt Developments (LSE: BDEV.L - news) <BDEV.L> shed 5.1 percent. Bovis Homes <BVS.L> lost 3.6 percent, Redrow (LSE: RDW.L - news) <RDW.L> dropped 2.2 percent and Bellway (LSE: BWY.L - news) <BWY.L> slipped 3.3 percent.

Retailers also lost ground, as traders cited sector switching, with Home Retail (LSE: HOME.L - news) <HOME.L> down 4.2 percent and Kingfisher (LSE: KGF.L - news) <KGF.L> 2.8 percent lower.

(Additional reporting by Dominic Lau; Editing by Andrew Hurst)