FTSE down as Vodafone drags, commodities ease

* FTSE 100 falls 0.5 pct

* Vodafone down after SocGen cuts price target

* Commodities slip but banks climb

By Michael Taylor

LONDON, Aug 28 (Reuters) - Britain's bluechip index edged lower early on Thursday as heavyweight Vodafone (VOD.L: Quote, Profile, Research, Stock Buzz) dragged after a negative broker note and commodities eased.

At 0802 GMT the FTSE 100 .FTSE was down 27.8 points, or 0.5 percent at 5,500.3.

One of the biggest weights on the UK benchmark was Vodafone, down 1.2 percent after Societe Generale cut its price target on the mobile phone group to 120 pence from 135 pence.

Heavyweight oil companies eased after gains in the previous session. BP (BP.L: Quote, Profile, Research, Stock Buzz), Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) and BG Group (BG.L: Quote, Profile, Research, Stock Buzz) lost 0.6-1.5 percent.

With a flurry of updates among mining shares, the sector also slipped as metal prices traded weaker.

Kazakh miner Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz) shed 3.3 percent after it posted a 21 percent fall in first half earnings per share as bad weather hit output, outweighing higher prices. [ID:nLS380758]

Vedanta Resources (VED.L: Quote, Profile, Research, Stock Buzz), Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz), ENRC (ENRC.L: Quote, Profile, Research, Stock Buzz) and BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz) dipped 0.4-2.5 percent.

Ferrexpo (FXPO.L: Quote, Profile, Research, Stock Buzz) was 0.4 percent lower after the Ukrainian iron ore miner posted a 105 percent jump in first half earnings per share on the back of record prices and said it was considering returning excess cash to shareholders.

In positive territory, UK banks featured after U.S. stocks rose overnight as investors grew more confident that Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) will not require a government bailout that would wipe out their equity.

Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz), HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) and Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz) tacked on 0.9 to 2.2 percent.

British subprime lender Cattles (CTT.L: Quote, Profile, Research, Stock Buzz) slipped 4.9 percent after it reported a 16.8 percent increase in its half-year profit but said more customers were experiencing repayment difficulties in the face of weakening economic growth.  Continued...