* FTSE 100 index down 0.2 percent
* Banks lower; European debt concerns remain
* Drugs weak; AstraZeneca hit by RBS downgrade
* Energy issues up as crude rallies
By Jon Hopkins
LONDON, Sept 29 (Reuters) - Britain's leading share index was lower at midday on Wednesday as continuing European debt uncertainties weighed on banking stocks, countering gains in the energy sector.
By 1054 GMT, the FTSE 100 index was down 12.66 points, or 0.2 percent, at 5,565.78, having quickly surrendered an opening push above 5,600.
"As we are a couple of days away from the end of the quarter I suspect a lot of investors have got square positions and are just unwilling to take what you might call last-minute risk," said Richard Hunter, head of UK equities at Hargreaves Lansdown.
Banks were the main drag on blue chip sentiment, with Royal Bank of Scotland falling 1.7 percent, as worries over the debt picture in Europe continued to have an impact, particularly concerns over the future for Irish banks.
Clothing retailers suffered after third-quarter profits at Sweden's Hennes & Mauritz missed forecasts due to weaker-than-expected gross margins.
Marks & Spencer lost 0.7 percent, while Next fell 0.1 percent, and elsewhere in the sector DIY retailer Kingfisher shed 1 percent.
Drug issues also fell back, with AstraZeneca the worst off, down 1.6 percent after RBS cut its rating for the drugmaker to "hold" from "buy".
The broker said that "after a strong run of positive clinical newsflow ... many share price drivers have played out."
Metals group Vedanta Resources was the biggest FTSE 100 faller, down 5.2 percent after its Sterlite Industries unit was ordered by a court to shut its Tuticor copper smelter in south India.
BP BUOYANT
Energy issues provided the main underlying prop for the blue chips as crude prices rallied after recent falls, with BP the best sector performer, up 2.2 percent.
BP said it was to fundamentally restructure itself in the wake of the Gulf of Mexico spill, creating a new safety unit, reviewing incentives it offers managers, and splitting up its core upstream unit.
Defence company Rolls-Royce was the top blue-chip riser, up 3.6 percent after Morgan Stanley hiked its rating for the group to "overweight" from "equal-weight".
On the economic front, British mortgage approvals for house purchases fell to a seven-month low in August, and net consumer credit unexpectedly contracted, according to official data.
The Bank of England said mortgage approvals numbered 47,372 in August, down from 48,346 in July and broadly in line with analysts' forecasts and a weaker industry survey last week.
And consumers unexpectedly made a net repayment of unsecured debt in August. Net consumer credit fell by 120 million pounds, the biggest drop since November 2009.
"The FTSE continues its back-and-forth price action ... The current range is between 5,635.72 and 5,471.69. The uptrend is still intact, with downside support waiting between 5,471.95 and 5,471.6," said Raghee Horner, Autochartist's chief market analyst. (Editing by Will Waterman; Graphics by Scott Barber)