* FTSE 100 down 1.1 percent, tech levels watched
* China data hurts miners
* Banks fall; Moody's downgrades Spain's rating
* BoE leaves rates flat
By Simon Falush
LONDON, March 10 (Reuters) - Britain's top share index fell sharply on Thursday after a downgrade of Spain's credit rating by Moody's further unsettled anxious investors, with high oil prices and weak Chinese trade data also denting sentiment.
Technical factors paint a gloomy picture too, with the FTSE 100 falling below a key support level which suggests more weakness is likely.
By 1222 GMT, the FTSE 100 was down 65.36 points, or 1.1 percent, at 5,871.94 having shed 0.6 percent on Wednesday. It is down 2 percent on the week, on track for its worst such show since last July.
It is below 5,881, the 38.2 percent Fibonacci retracement from the Nov. 30 low to the late February high. The next key retracement level -- 50 percent -- is at 5,812.
"If we close below the 5,881 level, it shifts the focus towards the downside and further weakness in the FTSE for the short term," said Michael Hewson, analyst at CMC
"The picture has shifted and we are having a good look at levels around 5,800."
The Bank of England's Monetary Policy Committee kept interest rates at a record low of 0.5 percent, but any residual relief that rates did not rise was swept away by the stream of negative news.
Though it has come off recent highs, Brent crude was trading above $114 on Thursday, as military activity intensified in Libya, ramping up concerns about supply and maintaining worries that the high price could hurt the demand outlook.
Miners were pressured as copper prices fell after weak Chinese import data cast doubt on demand from the world's biggest consumer of the metal, adding to worries about the global economy.
Rio Tinto shed 3.7 percent as it raised its offer for Africa-focused coal miner Riversdale Mining slightly to $3.9 billion in a final bid to woo key shareholders.
Moody's cut Spain's sovereign credit rating by a notch to Aa2 and warned of further cuts, saying that the country's plans to clean up the battered banking sector will cost more than the government expects and add to its debt burden.
"The Spanish downgrade heightens worries especially in light of the ECB's apparent hawkish stance on interest rates which would add more pressure to Southern Europe," Mic Mills, head of electronic trading at ETX Capital, said.
Banks were also a drag. Barclays, which has a big exposure to Iberian debt fell 2 percent.
Buyers came in for drugmakers, with GlaxoSmithKline the star FTSE 100 performer, up 1.3 percent, after U.S. regulators approved Benlysta, the first new treatment for lupus in 56 years and a potential $3 billion-a-year seller by 2015.
The FTSE 100 has moved into negative territory for the year but some analysts see the current weakness as an opportunity to get into the market at relatively depressed levels.
"I still maintain the view that there's upside for UK equities," said Peter Dixon, economist at Commerzbank.
"If you believe that the global economy story is still intact despite the high oil prices, and if you believe that other markets are going to go up as well, which I think we do believe, I think the UK will be pulled along in that wake." (Additional reporting by Tricia Wright)