* FTSE down 1.1 percent on global recovery doubts
* CRH warns on U.S. outlook, Wolseley falls
By David Brett
LONDON, Aug 24 (Reuters) - Britain's leading share index dropped by midday on Tuesday as concerns over the global recovery dented commodity and banking stocks, while Wolseley fell after CRH warned over its outlook for the U.S.
By 1051 GMT, the FTSE 100 was down 55.73 points, or 1.1 percent, at 5,179.11, having gained 0.8 percent at 5,234.84 on Monday, albeit in light volumes.
The index faced strong resistance at around 5,188.73 -- its 38.2 percent Fibonacci retracement of a fall from a high in April to a low in July.
Irish building supplies giant CRH set the tone for the session, warning core earnings would fall 10 percent this year, pointing to mounting concerns over the economy in the United States.
In London, Wolseley, the world's largest builders merchant distributor which has substantial exposure to the United States, shed 3.3 percent.
WPP, the world's largest ad firm by sales, which also has heavy U.S. exposure, fell 2.7 percent as it reported first-half like-for-like revenue up 2.5 percent, towards the lower end of forecasts from a Reuters poll, and warned of tougher comparatives ahead.
Reflecting market worries over the global economy, German debt outperformed riskier euro zone peers, driving yield spreads wider.
"What's happening in the bond market has got people spooked," Phil Roberts, technical analyst at Barclays Capital said.
"Come September, after Labour day, the market is in the mind frame to try the downside, so I expect there will be some more weakness." Investors will closely watch U.S. Existing Home Sales for July and the U.S. Richmond Federal Manufacturing survey for August, both due at 1400 GMT, for further signs as to the health of the world's biggest economy.
Wall Street index futures pointed to a lower open on Tuesday.
DOUBLE-DIP WORRIES
Britain faces the risk of sliding back into recession and the central bank's growth forecast for this year and next may be too optimistic, new Bank of England policymaker Martin Weale said in an interview with the Times newspaper.
Banks were the sharpest fallers with HSBC, which is in talks with Old Mutual over the purchase of a controlling stake in South Africa's fourth-largest bank, Nedbank, down 1.3 percent.
Mining and energy stocks fell in tandem with commodities as base metal prices and crude slid across the board on doubts over the sustainability of demand.
India-focused mining group Vedanta Resources shed 5.8 percent after India's environment ministry rejected a plan by Vedanta to mine bauxite in an eastern state, saying it violated forest laws.
Vedanta also faced regulatory hurdles in its bid for control of Cairn India, a potential deal valued at $9.6 billion that could give the group a slice of India's oil reserves.
Cairn Energy fell 1.1 percent after the oil explorer struck gas in Greenland, which disappointed investors who had hoped for an oil find, and said the sands were not of a type that usually yields commercial quantities.
Elsewhere in the sector, Chilean miner Antofagasta shed 2.3 percent after it trimmed its annual production target, even though it posted a near doubling in first-half earnings per share.
Global miner Rio Tinto, meanwhile, fell 2.6 percent after a Canadian newspaper linked it and a Chinese partner with a bid for Potash Corp, which is fending off a $39 billion hostile bid from BHP Billiton. Rio Tinto declined to comment.
Staying with both heavyweight miners, South Africa's National Union of Mineworkers said its members at a Rio Tinto-BHP Billiton joint venture would vote on a strike on Tuesday over wage demands. BHP Billiton dropped 1.2 percent.
Coal and base metals miner Xstrata droped 2.2 percent after it announced a $381 million agreed takeover of Australian-listed Sphere Minerals.
(Graphics by Scott Barber; Editing by David Cowell)