Britain's FTSE dragged down by mining shares; Tesco outperforms

* FTSE falls on persistent Greek concerns

* Chinese shares slump, weighing on miners

* Tesco (Xetra: 852647 - news) sales decline less than forecast

By Atul Prakash

LONDON, June 26 (Reuters) - Britain's top equity index slipped on Friday, led lower by mining stocks, although supermarket group Tesco rose after it reported a smaller-than-expected decline in sales.

Tesco's shares advanced 3.3 percent, after posting first-quarter performance suggesting it is recovering from an 18-month slump. That made it the best-performing stock in percentage terms on the FTSE 100. Shares (Berlin: DI6.BE - news) in its peers J Sainsbury (Other OTC: JSAIY - news) and Wm Morrison rose 1.5 percent.

The index was still down 0.6 percent at 6,767.72 points by 1302 GMT, as the persistent threat of a Greek default held back global equity markets.

Without a deal at the weekend to unlock frozen aid, Greece, which has received two bailouts worth 240 billion euros ($268.85 billion) since 2010, is set to default on a repayment to the International Monetary Fund due on June 30.

"The market is coming under pressure, but there is still a chance they will reach a last-minute agreement on Greece, as they have done in the past," said Dafydd Davies, partner at Charles Hanover Investments.

Mining stocks took the most points off the FTSE, with the FTSE 350 Mining Index down more than 1 percent. Mining companies account for about a tenth of the FTSE 100.

Traders said mining stocks fell because research firm Morningstar (NasdaqGS: MORN - news) forecast steel demand in China - the world's biggest metals consumer - had peaked. A slump in the Chinese stock market on Friday aggravated the pressure.

The FTSE 100 reached a record high of 7,122.74 points in April but has since retreated some 5 percent below that record high. The index remains up around 3 percent since the start of 2015, less than a 14 percent gain on the broader, pan-European FTSEurofirst 300 index. (Additional reporting by Sudip Kar-Gupta; editing by Larry King)