FTSE falls by midday, weighed down by banks, miners

* FTSE falls 0.95 pct, down 16 pct this year

* Miners slip, tracking weaker metals prices

* Banks under pressure after Goldman note, outlook

By Atul Prakash

LONDON, July 4 (Reuters) - Britain's blue-chip index fell nearly 1 percent by midday on Friday with banking stocks hit by a bearish Goldman Sachs note and miners tracking softer metals prices.

By 1109 GMT, the commodity-heavy FTSE 100 .FTSE was down 52 points, or 0.95 percent, at 5,425.1 points, giving up the previous session's gains.

The index, which has fallen nearly 16 percent this year after five successive years of gains, is heading for its seventh weekly loss in a row.

"If you look at the technicals and the fundamentals, people think there is still some way for it to fall, probably another 250 points before we get any recovery," said Neil Parker, market strategist at Royal Bank of Scotland.

"Nobody wants to be long in this market ... I would be particularly worried by a lot of inflation numbers that are coming out," he added.

Goldman said in a note to clients that European banks might need to raise 60 to 90 billion euros if a turn in the credit cycle triggered losses comparable with those seen a decade ago.

The brokerage also said it had lowered 2008-2010 estimates for over 40 banks and cut price targets on a number of them, including Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz), Deutsche Bank (DBKGn.DE: Quote, Profile, Research, Stock Buzz) and UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz).

Royal Bank, Barclays, HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz), HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) and Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz) were down between 1.4 and 3.2 percent.

"My gut feeling is that the banks are ready to turn the corner, but they are so susceptible. If there is another change in sentiment to the downside, then banking stocks are liable to get absolutely hammered again. They are very risky," said Tim Hughes, head of sales trading at IG Index.

Bradford & Bingley BB.L fell nearly 10 percent after the mortgage lender said it planned to increase its rights issue to 400 million pounds ($794 million) after U.S. private equity firm TPG Capital pulled out of a plan to buy a stake. [ID:nL03676609]

MINERS SLIP   Continued...