UK stocks fell on Friday and were set for weekly losses, led by declines in retailers' shares after data showed domestic retail sales fell more than expected in July.

The exporter-heavy FTSE 100 fell 0.7% by 0819 GMT, hovering around 1-month lows and set for a third consecutive weekly decline. The pound declined 0.15% to $1.2728 right after the data.

The mid-cap FTSE 250 was down 0.8%.

British retail sales volumes last month were 1.2% lower than in June, as heavy rain put off shoppers, while economists polled by Reuters had forecast a decline of 0.5%.

On an annual basis, retail sales were 3.2% lower than a year earlier, compared with economists' forecasts for a 2.1% decline.

"(Retail sales) It's a little bit contrasting (vs. inflation, wage growth data) and it may lead a lot of investors confused as to what exactly is going on," said Daniela Hathorn, senior market analyst at Capital.com.

The retail sales data comes days after inflation and wage growth data that showed inflationary pressures persisted, opening the doors for further rate hikes by the Bank of England.

"A 100% we are going to get a rate hike (next month) and it's just a case of are they going to stick to 25 basis points (bps) or they're going to go 50 bps," added Hathorn.

The recent batch of economic data fuelled a relentless sell-off across UK equities this week, with the blue-chip index down over 3.5% this week.

Retailers fell 1.5%, leading sectoral declines after the data. Personal goods shares also dropped 1.7%.

Among other top sectoral drags, industrial metal miners fell 1.7%, on concerns of weak demand outlook from top metals consumer China.

Worries over China's debt-laden property crisis and a weakening economy deepened after embattled developer China Evergrande Group filed for bankruptcy protection in a U.S. court.

Shares of RS Group fell over 4%, hitting the bottom of the benchmark index, after brokerage UBS downgraded the stock.

(Reporting by Siddarth S in Bengaluru; Editing by Subhranshu Sahu and Janane Venkatraman)