FTSE dips as weak retailers offset miners' rally

* FTSE 100 down 0.3 pct

* Retailers weak after results disappoint

* Miners rally with commodity prices

By Jon Hopkins

LONDON, 11 Sept (Reuters) - Britain's leading share index dipped early on Thursday, as retailers fell after some disappointing results and offset a rally from miners sparked by a recovery in commodity prices.

By 0801 GMT, the FTSE 100 index was 17.6 points, or 0.3 percent, lower at 5,348.6, after losing 0.9 percent on Wednesday.

Investors also remained cautious over any further fallout in the financial sector after U.S. investment bank Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) failed on Wednesday to alleviate worries about its ability to survive.

U.S. stocks rose overnight as OPEC's move to shore up oil prices boosted energy shares and Texas Instruments' (TXN.N: Quote, Profile, Research, Stock Buzz) outlook soothed fears about technology spending.

"A bit of a bounce in mining stocks is a focus in an otherwise quieter London market today," said Ben Timms, senior trader at Blue Index, "with the obvious comment being that the sector is looking oversold again."

"Retailers are being sold off aggressively once more, with the global slowdown and inflation worries remaining underlying issues," Timms added. "But with only the latest weekly U.S. jobless numbers due this afternoon, and the August Fed Budget, scheduled after the London close, UK stocks look likely to drift after the recent volatile showings."

Morrison Supermarkets (MRW.L: Quote, Profile, Research, Stock Buzz) was the top FTSE 100 faller, down 5 after the supermarket group's in-line first-half results failed to inspire. [ID:nLB26816]

Cazenove said "there is not obviously an upgrade in these numbers and the relatively muted operational gearing despite very strong top line performance does suggest that the trajectory of margin progression is becoming much flatter".

Shares in Home Retail (HOME.L: Quote, Profile, Research, Stock Buzz) lost 8 percent, making them the top faller on the mid-cap FTSE 250 index .FTMC, after worse-than-expected second-quarter results at both its businesses, Argos and Homebase. [ID:nLA194689]

Gloom from the high street also hit Kingfisher (KGF.L: Quote, Profile, Research, Stock Buzz), down 2.5 percent with Bernstein cutting its rating to "market perform" from "outperform".

MINERS GAIN

Among the heavyweight miners, Ferrexpo (FXPO.L: Quote, Profile, Research, Stock Buzz) added 4 percent, shrugging off confirmation last night that the stock will be demoted from the FTSE 100 index after the latest indexes reshuffle having been in the index for just one quarter.

Eurasian Natural Resources (ENRC.L: Quote, Profile, Research, Stock Buzz), Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz), Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz) and Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz) were also all up between 2 and 3.7 percent.

The price of gold bounced off an 11-month low on Thursday as physical buying picked up due to lower prices.

Energy firm BG Group (BG.L: Quote, Profile, Research, Stock Buzz) was also in demand, up 3.8 percent, after Brazil's state-run oil company Petrobras (PBR.N: Quote, Profile, Research, Stock Buzz) said on Wednesday that it estimates the recoverable oil and gas reserves in the subsalt Iara field at 3-4 billion barrels.

BG owns part of the block in which the field lies. Click on [ID:nN10482894].

Traders also cited underlying speculative interest as helping BG Group following its decision earlier this week to abandon a takeover bid for Origin Energy of Australia (ORG.AX: Quote, Profile, Research, Stock Buzz).

Other oil majors found support as crude prices CLc1 held steady on Thursday as dollar strength was countered by Wednesday's surprise OPEC production cut and data on rising U.S. crude stocks.

Aside from commodities, ITV (ITV.L: Quote, Profile, Research, Stock Buzz) was the top blue-chip performer, extending this week's rally by another 6 percent as takeover hopes continued to swirl around the broadcaster.

Recent talk has highlighted Italy's Mediaset (MS.MI: Quote, Profile, Research, Stock Buzz) as a potential bidder for ITV, and news on Wednesday that Charles Allen, the UK broadcasters former boss is joining a private equity group also added to the takeover speculation. (Additional reporting by Simon Falush; Editing by Erica Billingham)