* FTSE down 0.3 percent
* Old Mutual slides as HSBC pulls out of Nedbank bid
* Life insurers weighed by Citigroup note
By David Brett
LONDON, Oct 15 (Reuters) - Britain's top shares were lower around midday on Friday, led down by Old Mutual, which fell after HSBC ended talks to pay $8 billion for a majority stake in South African lender Nedbank from the insurer.
HSBC had been in exclusive talks with Anglo-South African insurer Old Mutual to buy up to 70 percent of South Africa's fourth-largest bank.
Old Mutual, which shed 6.5 percent, said HSBC had not told it why it withdrew.
"It's disappointing. The share price has gone up in the expectation that this thing was going out the door, and it's no surprise to see it coming back again," Oriel Securities analyst Marcus Barnard said.
Sector peers were also under pressure as Citigroup downgraded the UK life insurance sector to "underweight" from "neutral" in a strategy note, with Standard Life and Legal and General, off 2.6 and 1.4 percent, respectively.
By 1033 GMT, the FTSE 100 was down 18.00 points, or 0.3 percent, at 5,709.21, having closed 0.4 percent lower on Thursday at 5,727.21.
Miners were also weaker as investors locked in gains from the previous two sessions.
African Barrick Gold was down 1.0 percent having cut its 2010 production target for the second time in three months on Thursday.
RALLYING BANKS
Banks, the heaviest fallers on Thursday on worries about possible cash raisings after Standard Chartered announced a $5.3 billion on Wednesday, recovered, adding the most points to the index.
HSBC was up 0.3 percent, while the sector was led higher by Royal Bank of Scotland, up 1.9.
Investors were awaiting a speech from U.S. Federal Reserve Chairman Ben Bernanke at the Boston Fed on Friday, which could provide clues on the Fed's next policy steps to boost growth in the World's biggest economy.
Financial markets, which widely expect the U.S. central bank to begin a new program of buying longer-term U.S. Treasury securities at its Nov. 2-3 meeting, will look for clues about the scope of the programme.
Wall Street futures were pointing to a mixed open on Friday, ahead of the speech and a welter of U.S. pointers, including September consumer prices and retail sales numbers, and October's Empire State Index and University of Michigan consumer sentiment indexes.
"It's now a question of the potential next round of QE (quantitative easing) being formalised by the States and potentially in the UK as well, but until such time as that happens, there's still an element of nerves around whether the next QE programme will actually be successful," said Richard Hunter, head of UK equities at Hargreaves Lansdown.
Elsewhere, aircraft engine maker Rolls-Royce rose 1.1 percent, after Goldman Sachs upgraded the firm to "buy" from "neutral".
Mid cap Belgium-based gearbox maker Hansen Transmissions jumped 10.2 percent after it received a 75 million-euro offer for its industrial gearbox unit from Japan's Sumitomo Heavy Industries, and planned to focus solely on wind energy. (Editing by Karen Foster)