* Stores fall after weak May UK retail sales data
* Oils, miners down as commodity prices dip
* Banks lower, led down by HSBC
By Jon Hopkins
LONDON, June 18 (Reuters) - Britain's leading share index was down 0.8 percent at midday on Thursday, weighed on by falls in oils, miners, and banks, with weak retail sales numbers hitting store owners.
By 1059 GMT, the FTSE 100 index was 35.83 points lower at 4,242.63, having closed down 50.11 points, or 1.2 percent in the previous session.
"Trading has lacked energy this week, with summer holidays and the end of the quarter approaching there is a fear that investors will start to shut up shop and walk away," said Joshua Raymond, Market Strategist at City Index.
Retailers featured among the biggest FTSE 100 fallers, with Home Retail Group shedding 2.4 percent, while Next, Marks & Spencer, and Kingfisher shed between 1.2 and 2.3 percent.
British retail sales fell unexpectedly in May as shoppers tightened their belts after splashing out over the Easter holidays, while government borrowing hit a record high, official data showed on Thursday.
The Office for National Statistics said retail sales volumes fell 0.6 percent on the month, against a forecast of a 0.4 percent gain. That left them 1.6 percent lower than in the same month a year ago.
Sterling fell to a one-week low against the euro on the data while gilt futures rallied as investors tempered some of their recent optimism over Britain's economic outlook.
Adding to the negative tone for the outlook on the economy, British factory orders fell slightly more than expected in June as export orders had their biggest drop in more than a decade, the Confederation of British Industry said.
Weak energy shares were the biggest drag amongst the blue chips as oil prices held below the $72 per barrel level, with BP Royal Dutch Shell and BG Group losing 0.4 to 1.8 percent.
Miners saw some early gains reversed as metal prices remained weak amid demand concerns.
Rio Tinto was the worst off, down 3.2 percent reflecting its recent rights issues, while Vedanta Resources, Antofagasta, and Kazakhmys lost 1.4 to 2.2 percent.
Xstrata, however, held firm, up 1.2 percent supported by two broker upgrades. Morgan Stanley raised its rating for the miner to "overweight" from "equal-weight", while Citigroup upped its stance to "buy" from "hold".
BANKS MIXED
Among the banks, part-nationalised Lloyds Banking Group gained 3 percent, reflecting index re-weighting factors, while Royal Bank of Scotland gained 0.8 percent and Standard Chartered added 2.2 percent.
But overall the sector was lower, with Barclays down 1.9 percent and heavyweight HSBC off 1.4 percent.
The largest shareholder in HSBC, Legal & General Investment Management, has offered for the first time public support for activist investor Eric Knight and urged the bank to answer questions he has raised over the bank's strategy.
U.S. stock futures pointed to opening falls in New York on Thursday after a mixed showing, with banks in focus after the U.S. government's extensive proposals for regulatory reform were unveiled by President Barack Obama on Wednesday. Defensive stocks were in favour, with mobile telecoms group Vodafone in demand, up 2.1 percent, while British American Tobacco and Imperial Tobacco gained 1.7 and 1.3 percent respectively.
BAE Systems saw good support, up 1.5 percent after UK newspaper the Daily Mail said that Saudi Arabia was considering placing an order for a further 72 Typhoon jets worth about 5 billion pounds ($8.20 billion).
Aircraft engine producer Rolls-Royce benefitted as well, adding 1.1 percent. (Editing by Greg Mahlich)