* Banks shed Tuesday's gains; KPMG survey cautious
* Miners, oils fall with weak commodity prices
* Surprise BoE MPC split vote fails to impact
By Jon Hopkins
LONDON, Aug 19 (Reuters) - Britain's leading share index was 0.8 percent lower at midday on Wednesday, dragged down by falls in heavyweight banks, miners and oils as investors turned risk averse once more, with defensive sectors benefitting.
By 1053 GMT, the FTSE 100 index was 38.31 points lower at 4,647.47, after closing 40.77 points higher on Tuesday. The blue-chip index has rebounded 35 percent since hitting a year low in March.
"Obviously with the strong gains last month and a fairly steady (performance) last week people were expecting a bit of pullback, particularly with volumes very low," said Omer Bhatti, head of sales for World Spreads.
"Volumes are down by about 30 percent over the summer, and the summer came early this year ... and pension funds are unlikely to come in at current levels with the market looking overbought," Bhatti added.
Banks took the most points off the index, as the appetite for risk again reversed. HSBC, buoyed on Tuesday by a Goldman Sachs upgrade, lost 3.3 percent, while Barclays, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered shed 0.1 to 2.6 percent.
The sector was not helped by a survey from accountants KPMG, which found Britain's banks are likely to see their battered retail arms slide to a loss in the second half of 2009, as the cost of bad loans, tough competition and wholesale funding continues to weigh.
Commodity issues also fell back as raw material prices retreated on demand concerns due to doubts over the pace and extent of economic recovery.
Oil majors dropped as crude prices retreated back below $69 a barrel. Royal Dutch Shell, BG Group, BP, Cairn Energy and Tullow Oil fell 0.2 to 1.6 percent.
Miners shed some of Tuesday's gains as copper fell to a near two-week low, with Vedanta Resources, Antofagasta, Xstrata, Kazakhmys, Anglo American and BHP Billiton down between 1.0 and 2.4 percent.
Eurasian Natural Resources Corporation, however, provided some respite for the sector. Its shares rose 7.1 percent after the Kazakh-focused miner posted a fall in first-half earnings that was smaller than expected.
Among other blue-chip gainers, Serco climbed 1.1 percent as Evolution Securities initiated coverage of the outsourcing group with a "buy" rating and 500 pence target.
Retailers saw good demand, with Next, Marks & Spencer and Home Retail Group up between 0.9 and 1.2 percent.
MPC VOTE SPLIT
Bank of England Governor Mervyn King and two other Monetary Policy Committee members wanted to raise Britain's quantitative easing programme by 75 billion pounds this month but were outvoted by their six colleagues.
The 6-3 split vote revealed in the minutes of the MPC's August 5-6 meeting published on Wednesday -- which showed Tim Besley and David Miles joining King's dissent -- sent shockwaves through currency and bond markets which had been expecting a unanimous vote in favour of the 50 billion pounds extension, although equities remained largely unmoved.
Elsewhere, British manufacturing orders fell slightly more than expected in August but firms were less gloomy about their future production than at any time in the last year, a survey showed.
The Confederation of British Industry's industrial trends survey showed the order book balance rose to -54 from -59 in July. Analysts had forecast a reading of -50.
Ex-dividends knocked 9.65 points off the FTSE index, with British American Tobacco, Hammerson, HSBC, Pearson, Prudential, SABMiller, Scottish & Southern Energy and Thomson Reuters all losing their payout attractions on Wednesday. (Editing by Simon Jessop)