Oils, miners dent FTSE by midday, banks support
* FTSE 100 down 0.7 pct
* Oil, mining stocks slide on demand outlook
* Banks up, RBS supported by insurance division bid
By Phakamisa Ndzamela
LONDON, Jan 12 (Reuters) - Britain's blue-chip stocks fell 0.7 percent by midday on Monday, dragged down by oil and mining shares as fears about a bleak economic outlook weighed on demand for energy and raw materials, but rising banks limited losses.
By 1141 GMT, the FTSE 100 .FTSE lost 30.91 points to 4,417.63, having slid 1.3 percent on Friday, contributing to a loss of 2.5 percent for the first trading week of 2009.
Oil CLc1 slid over 5 percent to below $39 a barrel on Monday weighed by persistent fears about a slowdown in energy demand after a big rise in U.S. unemployment was revealed by data released on Friday.
Oil stocks weighed most on the benchmark bourse with Royal Dutch Shell (RDSa.L), Cairn Energy (CNE.L), BP (BP.L), BG Group (BG.L) and Tullow Oil (TLW.L) all down between 0.1 percent and 2.3 percent.
"There's a little weakness in oils, and mining stocks are weaker," said Richard Hunter, head of UK equity research at Hargreaves Lansdown.
"It's the old demand story, we've seen a couple of spikes on hopes about the longer term demand outlook but any gains have been erased."
The world's top oil producer, Saudi Arabia, plans to cut output by up to 300,000 barrels per day (bpd) to prop up the oil price, industry sources said on Sunday. [ID:nLB708600].
Miners also contributed to losses in the midday session, with Antofagasta (ANTO.L), down 6.2 percent, the worst performing blue-chip mining stock after RBS downgraded the stock to "hold" from "buy".
"We still like their business model but believe the upcoming results season could prove more challenging than some in the market anticipate," the broker said in a note to clients.
Anglo American (AAL.L), Kazakhmys (KAZ.L), BHP Billiton (BLT.L), Eurasian (ENRC.L), Vedanta Resources (VED.L) and Rio Tinto (RIO.L) fell between 0.8 percent and 3.6 percent.
