FTSE closes 0.2 pct lower as banks, insurers weigh

* FTSE 100 closes 0.2 pct lower

* Banks, insurers slip on grim economic outlook

* Commodities, retails stocks gain

By Atul Prakash

LONDON, July 25 (Reuters) - Britain's blue-chip index ended 0.2 percent lower on Friday, as banking and insurance stocks fell on a gloomy economic outlook, outweighing gains in commodities and retail sector shares.

The commodity-heavy FTSE 100 .FTSE closed down 9.7 points at 5,352.6, after losing 1.6 percent on Thursday. The benchmark index ended the week with a decline of 0.4 percent -- the ninth negative weekly close in the past 10 weeks.

Banking stocks were the biggest sectoral loser, as investors remained concerned about more writedowns and the grim economic outlook.

"The FTSE will struggle to make progress in the short term. The first sector that needs to recover is the banking side, but the economic news generally is deteriorating," said Roger Cursley, UK strategist at Investec.