* FTSE 100 index down 0.7 percent
* Miners, oils fall on China monetary tightening worries
* Invensys, AB Foods weak after trading updates
LONDON, Jan 20 (Reuters) - Britain's top share index fell in early trade on Thursday, with weakness in commodity issues the main drag on concerns over the possibility of further monetary tightening by China.
By 0907 GMT, the FTSE 100 was down 44.72 points, or 0.7 percent, at 5,932.98. It fell 1.3 percent on Wednesday after hitting a peak on Tuesday not seen since May 2008.
Miners were weak, reflecting easier copper prices, as strong growth data from China was undermined by a less-than-expected slowing in inflation, heightening concern over further monetary tightening by the world's biggest consumer of commodities.
Kazakhmys was the biggest sector faller, down 3.1 percent, while Rio Tinto lost 1.8 percent and BHP Billiton fell 1.6 percent.
BHP Billiton posted a 4 percent rise in quarterly output of iron ore to record levels, to meet swelling demand from its main customers in China and other parts of Asia.
Energy issues were also weak, as the crude price fell, led by BP, down 1.2 percent.
Global heavyweight HSBC, down 0.4 percent, led banks lower as the sector extended Wednesday's falls which followed disappointing results from U.S. peers Goldman Sachs and Wells Fargo. Morgan Stanley will report fourth-quarter results on Thursday.
"It's easy come, easy go at the moment for the FTSE, as sentiment ebbs after strong gains at the start of the month," said Mic Mills, head of electronic trading at ETX Capital.
"The earnings season is key, and any disappointments felt hard," Mills said.
Engineering group Invensys, however, was the heaviest FTSE 100 faller, dropping 5.7 percent as weakness in orders at its rail division soured an in-line trading update.
Food producer to clothing retailer AB Foods, down 2.2 percent, was also knocked by a disappointing trading update.
"The cold weather has impacted current sugar production, whilst higher wheat and cotton prices are expected to impact profit margins ... going forward," said Keith Bowman, equity analyst at Hargreaves Lansdown stockbrokers.
GRID POWERS ON
National Grid was the top FTSE 100 riser, up 1.3 percent, as JP Morgan raised its rating to "overweight" from "neutral" on valuation grounds.
Other blue-chip utilities found support as their defensive attractions came into play, Severn Trent standing out with a rise of 0.6 percent.
Advertising giant WPP Group gained 0.7 percent on the back of an upgrade to "buy" by Citigroup in a review of the European media sector.
And oil services group Petrofac, ahead 0.4 percent, was lifted by a similar upgrade from French broker Natixis.
Investors were awaiting the latest CBI industrial trends data, due at 1100 GMT, for more guidance on the state of the economy and prospects for interest rate rises.
In the United States, home sales for December, weekly jobless claims and the Philadelphia Fed business index for January are likely to be of interest in the afternoon.
(Editing by David Hulmes)