FTSE falls by midday as miners, banks weigh

* FTSE 100 drops 0.6 pct, hovers near 5-month lows

* Miners slip, tracking weaker metals prices

* ECB rate decision, U.S. jobs data awaited

By Atul Prakash

LONDON, July 3 (Reuters) - Britain's blue-chip index touched a five-month low on Thursday, as mining stocks slipped tracking softer metals prices and an uncertain economic outlook continued to hit the banking sector.

By 1024 GMT, the commodity-heavy FTSE 100 .FTSE was down 32.5 points, or 0.6 percent, at 5,392, after falling to a low of 5,358.5 points. It lost 1 percent in the previous session.

Investors awaited the release of U.S. non-farm payrolls data later in the day for near-term market direction, with economists expecting a loss of 60,000 jobs, against 49,000 job losses in the previous month.

The market will also keep a close eye on the European Central Bank's rate decision, due at 1145 GMT. The central bank is expected to raise interest rates to 4.25 percent from 4 percent to curb inflation, analysts said.  Continued...