* FTSE 100 up 0.4 percent
* Miners firm on receding China policy worries
* UK banks hurt after Italian banks' shares suspended
By Tricia Wright
LONDON, June 24 (Reuters) - Strong miners propped up Britain's top shares on Friday, but overall sentiment was downbeat on concerns over the Italian banking sector and the passage of a Greek austerity plan.
The UK benchmark index closed up 23.34 points, or 0.4 percent, at 5,697.72, recovering from a three-month closing low on Thursday but ending well below a session-high 5,768.54.
Miners , among the sharpest fallers in the previous session, kept the FTSE 100 afloat, adding around 15 points to the index after comments from Chinese Premier Wen Jiabao fuelled hopes that Beijing's policy tightening was drawing to a close.
Banks , however, came under pressure on further concern over Europe's debt woe after a brief suspension in the trading of Italian banks UniCredit and Intesa Sanpaolo after their shares hit the daily downward limit.
Traders said investor sentiment was dealt the sharpest blow by uncertainty as to what triggered this volatility, offering up as one possible catalyst speculation that imminent stress test results may highlight capital shortfalls at Italian lenders.
Lloyds Banking Group led the market lower, off 4.1 percent, followed by Royal Bank of Scotland , down 3 percent, and Barclays , which shed 2.5 percent.
Earlier, the market received a shot in the arm after Greece reached agreement with EU and IMF leaders on additional tax rises and spending cuts to plug a 3.8 billion euro funding gap, paving the way for a much-needed aid package in July.
However, there is still a hurdle to clear, as the plan must be put to the vote in Greece's parliament next week.
"Obviously everybody's concerned about the outcome of the Greece vote and which way that's going to go ... there's a lot of underlying nervousness out there," Mark Priest, senior equities trader at ETX Capital, said.
GREEN SHOOTS
Upbeat data from the United States gave investors some cause for optimism, with durable goods orders up more than expected in May, but U.S. blue-chips were down 0.7 percent by London's close, on the new concerns over Europe.
"We're starting to see the shoots of positive data, and I reckon that will ultimately filter through," Yusuf Heusen, senior sales trader at IG Index, said.
"But there is always going to be that question mark over sovereign debt and issues that could rear their heads -- look at the Italian banks today."
Chip designer ARM Holdings shot to the top of the FTSE 100 leaderboard, up 3.8 percent, after results from Oracle and Accenture which Panmure Gordon said suggested continued good growth in large enterprise IT investment and was supportive of the UK sector overall.
Rolls-Royce firmed 3.2 percent after the company,
alongside Daimler
British industrial and engineering group GKN added 3.1 percent as sentiment surrounding the sector was boosted after better-than-expected sales performances by some global automakers in China. (Additional reporting by David Brett; Editing by David Hulmes)
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