* FTSE 100 index drops 1.6 percent
* Banks knocked by European debt contagion concerns
* Miners weak as metal prices fall
* Kingfisher hit by double broker downgrades
By Jon Hopkins
LONDON, Nov 26 (Reuters) - Britain's leading shares were down sharply by midday on Friday, reversing recent gains, with banks knocked by ongoing concerns over Europe's debt crisis, and commodity issues hit by weak metals and crude prices.
By 1157 GMT, the FTSE 100 index was 92.89 points lower, or down 1.6 percent at 5,606.04, erasing most of a 117 point rally made in the past two sessions.
The UK blue chip index is now down 2.2 percent on the week and is 1.2 percent lower on the month, having seen strong gains in the first-half of November eradicated.
"From a chartist point of view, (on) the FTSE 100 the downside breakout of the 20-day moving average has dampened the bullish sentiment and tarnished the short term outlook," said Nicholas Suiffet, an analyst at Trading Central.
"As long as the former highs reached in early November are not surpassed, the risk will remain on the downside. Expect a further correction move towards the support base around 5,440 and 5,330," Suffiet said.
Banks were the worst blue chip performers on Friday, led by Lloyds Banking Group, down 4.2 percent, as worries about European sovereign debt contagion gathered pace.
A majority of euro zone nations and the European Central Bank are encouraging Portugal to seek aid from a European rescue fund, the Financial Times Deutschland reported.
Integrated oils were also a drag on blue-chip sentiment as the crude price fell, hurt by a stronger dollar, with BP and Royal Dutch Shell both down 1.5 percent.
Miners also suffered as metal prices fell reversing a recent rally on concerns about tightening trading conditions and with China interest rate concerns continuing.
Vedanta Resources was the top FTSE 100 faller, down 4.9 percent, while Antofagasta lost 4.7 percent.
China will shift its monetary policy to "stable" from "relatively loose" next year while conducting an active fiscal policy to maintain economic growth of at least 8 percent in 2011, the official Shanghai Securities News reported on Friday, citing unidentified sources.
WALL STREET TO WILT
U.S. stock futures pointed to a weaker start on Wall Street as trading resumes after the Thanksgiving holiday on Thursday, with the market only open for a half-day session on Friday.
Among individual UK blue-chip fallers, DIY retailer Kingfisher shed 2.9 percent. Traders cited the impact of a downgrade by BofA Merrill Lynch to "underperform" from "neutral" with an unchanged 230 pence price target.
Investec Securities also cut its stance on Kingfisher to "sell" from "hold" in a review of British general retailers in which it downgraded the sector overall to "underweight".
However, Marks & Spencer added 0.2 percent as Investec raised its rating to "buy" from "hold" in the review.
Telecoms giant BT Group was the top FTSE 100 riser, up 3.1 percent after the firm said it is to sell a 5.5 percent stake in Indian IT services group Tech Mahindra.
BT also got a boost as Exane BNP Paribas hiked its target price for the firm by 20 percent to 265 pence. (Editing by Jon Loades-Carter)