FTSE slips 2.8 pct as S&P move deepens gloom

* FTSE 100 ends down 2.8 pct

* Banks, commodities stocks biggest weight

* S&P cuts U.K. outlook to negative

* U.K. retail sales better than f'cast, borrowing data worse

* U.S. jobless data adds to bleak outlook

By Simon Falush

LONDON, May 21 (Reuters) - A cut in the UK's ratings outlook from agency Standard & Poor's weighed on Britain's top share index, with weakness in heavyweight oils, miners and banks contributing to a 2.8 percent slide by close on Thursday.

The FTSE 100 index ended 122.94 points lower at 4,345.47, its biggest daily fall since March 27, having closed 13.84 points lower on Wednesday.

The index is down 2 percent so far this year but has gained 25.6 percent since hitting a six-year trough on March 9.

S&P revised down its ratings outlook for the UK to negative from stable, prompting already weak UK stocks to fall further and the pound to slip sharply against the dollar GBP=, though it has since recovered.

"The potential downgrade (from S&P) has given an excuse for investors to sell after the recent sharp gains," said Grahame Exton, fund manager at Tilney Investment Management.

"Investors are realising it won't be the V-shaped recovery that they were pricing in."

The extent of the economic gloom for the UK's finances was reinforced by data showing public borrowing hit a record high for an April since records began in 1984. [ID:nONS004245]

Banks weighed heaviest on the UK blue chip index, with HSBC (HSBA.L), Royal Bank of Scotland (RBS.L), Barclays (BARC.L), Standard Chartered (STAN.L), and Lloyds Banking Group (LLOY.L) shedding 3.1 to 5.9 percent.

The S&P announcement and borrowing data took the shine off numbers from the Office of National Statistics which showed British retail sales rose at nearly double the rate expected by analysts in April, gaining 0.9 percent month-on-month.