(Corrects date for coverage resuming)
* FTSE down 1.2 percent on day, up 9 percent in 2010
* Banks, miners fall, extend recent weakness
* Index gains 6.7 percent in December
By Simon Falush
LONDON, Dec 31 (Reuters) - Weaker commodity stocks and banks dragged Britain's top shares lower in thin volumes on the last day of 2010, but the index ended December and the year in firmly positive territory.
The FTSE 100 <.FTSE> closed 71.07 points or 1.2 percent lower at 5,899.94 on Friday, after a third day of losses as investors locked in profits made so far this year. The index had scraped above 6,000 just before the Christmas break.
The index closed provisionally 0.7 percent lower, but fell further after some aggressive selling in the auction period prior to the official close.
The index gained 6.7 percent in December and 9 percent in 2010. It was down 0.9 percent on the week after four consecutive weeks of gains, but has gained 23.2 percent since touching a low for the year at the start of July.
Daily trading volume was under 25 percent of the 90-day moving average.
Miners <.FTNMX1770> were the biggest drag on the index,
giving up some of the chunky gains made in 2010. They still
managed to close the year almost 28 percent higher after a 108
percent gain in 2009, bolstered by record high metal prices.
Britain's stock markets will be closed on Monday Jan. 3 for a
public holiday. Coverage will resume on Tuesday, Jan. 4
TIGHTER POLICY
The sector has been hampered on lingering concern about implications of tighter monetary policy in China after the world's most populous country raised interest rates on Christmas day.
"News that China raised rates has prompted a feeling from some that a correction that was likely to be seen at some point next year may come earlier than expected," said Giles Watts, head of equities at City Index.
"There's a realisation that the gains may have been a bit frothy and some may be looking to take profits ahead of the curve."
Some miners like Rio Tinto
UK macroeconomic data further underlined the choppy nature of Britain's recovery as house prices rose in December for the first time since May. Numerous previous indicators had shown house prices falling.
Banks <.FTNMX8350>, which have been hindered by worries over
euro zone debt exposure in 2010, were lower with Barclays
Energy companies were lower as crude
Oil was set to close the year up more than 12 percent and averaged nearly $80 a barrel -- the second highest on record -- driven by a resurgence in global demand, a harsh winter in the northern hemisphere and falling inventories.
The energy sector <.FTNMX0530> has gained 0.6 percent this year, underperforming largely due to a sharp fall in BP after the major oil spill in the Gulf of Mexico. (Editing by David Holmes)