* FTSE falls 0.2 percent in holiday-thinned volume
* Miners shrug off China rate hike, precious metals gain
* Smith and Nephew weighed on by FDA announcement
By David Brett
LONDON, Dec 29 (Reuters) - Britain's top shares fell in midsession trade on Wednesday, weighed down by weakness in banks which offset a turnaround in mining stocks as investors shrugged off a rate hike in China.
By 1141 GMT, the FTSE 100 was down 14.20 points or 0.2 percent at 5,994.72, having closed at a fresh 30-month high on Friday and above 6,000 for the first time since June 3, 2008.
"There is very little that can be interpreted from today's session in truth," Joshua Raymond, market strategist at City Index, said. "Strength in miners is helping to counter balance weakness in banking stocks ... The rate hike by China was of no real surprise to the market and there is every chance that China could announce another two to three hikes in 2011 as part of their new prudent monetary stance to curb spiralling inflation."
Miners looked set to end 2010 on a strong note, continuing a stellar run enjoyed over the last two years, with precious metals operators African Barrick Gold and Randgold Resources rising 3.5 percent and 2.9 percent respectively, lifted by higher gold prices.
Miners have gained 29 percent so far this year, compared with a 10.8 percent gain for the FTSE 100, and rose 108 percent in 2009, bouncing from a 56 percent drop in 2008.
Banks weighed on London's blue chips, blighted by lingering concerns over Europe's debt problems.
Elsewhere, Smith & Nephew shed 2 percent after news on Tuesday that the U.S. Food and Drug Administration warned the British orthopaedic device maker that it failed to establish adequate manufacturing validation procedures for a hip replacement device.
"It's all about sentiment rather than any big problem," a trader said. "You've also got to bear in mind that S&N shares have had a good run recently on vague takeover speculation, so investors only need a small excuse to bail."
Alliance Trust, BT Group, Burberry Group and Experian took 1.08 points off the FTSE 100 index after losing their payout attractions.
There was no domestic data due for release on Wednesday, while in the United States, the latest weekly U.S. mortgage and refinancing index is due at 1200 GMT.
The FTSE remains on course for its strongest December since 1987 when it rose 8.5 percent. It is up 8.4 percent so far this month, albeit in wafer-thin volume.
"The FTSE continued to crawl near the psychological 6,000 level without much fanfare," said Enis Mehmet at Autochartist.
"Traders seem to be content with the market at this level, feeling neither too bullish nor bearish ... This could be a sign that traders are becoming concerned about the strength and direction of this index." (Editing by David Holmes)