* FTSE down 0.2 percent, S&P cuts Japan's credit rating
* Banks and insurers among top fallers
* Randgold top riser after upgrade, miners support the index
By David Brett
LONDON, Jan 27 (Reuters) - Weakness in financials after Japan's credit rating was cut by Standard & Poors outpaced demand for miners, leaving Britain's top share index lower on Thursday.
By 0909 GMT, the FTSE 100 was down 17.09 points or 0.3 percent at 5,952.14, clipping some of the previous session's gains of 0.9 percent.
Banks were the biggest fallers on London's blue chip index with confidence in the sector knocked as S&P downgraded Japan to AA-minus from AA.
Royal Bank of Scotland dropped 1.9 percent, while other financials were also lower with insurers Aviva and Standard Life off 0.9 and 0.6 percent respectively.
"Clearly that (S&P's downgrade of Japan) will be weighing on confidence in the wake of the Fed's decision (to continue with its quantitative easing policy) ... and the Dow's failure to hold 12,000 will have had a slight impact on sentiment," Jeremy Batstone-Carr, strategist at Charles Stanley, said.
Overnight, the U.S. Federal Reserve said high unemployment still justifies a $600 billion bond-buying program.
SURPRISE DROP
Britain's retailers were under pressure after Swedish fashion retailer Hennes & Mauritz posted a surprise fall in fourth-quarter profit.
Next shed 2.2 percent and Marks and Spencer dropped 1.5 percent.
Retailers have been under pressure following a tough Christmas trading period, a shock fall in British GDP and with the impact of the UK government's austerity measures still to be fully felt.
Elsewhere, aerospace components maker GKN fell 0.9 percent after a downgrade to "reduce" from "buy" from Nomura, while engine maker Rolls Royce rose 1.1 percent after the same broker upgraded to "buy" from "neutral".
Miners found favour among investors, led by Randgold Resources, up 4.7 percent as HSBC upgraded the precious metal miner to "overweight" from "neutral".
"Easy credit conditions and the continued infusion of morphine are exactly what investors in risk assets want, so one can't deny in the near term share prices can make some further upside," Charles Stanley's Batstone-Carr said.
The sector was also helped by bullish updates from Kazakhmys and Vedanta.
Meanwhile, drugmaker AstraZeneca, up 2.1 percent, garnered support after delivering above-forecast fourth quarter earnings and a promise to buy back $4 billion of its own shares.
BSkyB added 1.3 percent as first-half profit rose 26 percent, showing why Rupert Murdoch's News Corp is keen to secure its takeover deal without delay. (Editing by David Holmes)