Britain's FTSE underperforms euro zone as commodity shares drop

* FTSE 100 down 0.5 pct

* New (KOSDAQ: 160550.KQ - news) signs of Chinese economic weakness impact miners

* HSBC leads banks lower again as pressure builds over Swiss

unit

* Royal Mail (LSE: RMG.L - news) hit by JP Morgan downgrade

(Recasts, adds detail, quotes)

By Alistair Smout

LONDON, Feb 10 (Reuters) - Britain's top equity index

drifted lower on Tuesday, hit by a drop in heavyweight banks and

commodity stocks, while Royal Mail led fallers after a

broker downgrade.

Fresh signs of economic weakness in China, the world's

biggest consumer of metals, hit miners, with the FTSE 350 Mining

Index slipping 1.9 percent.

Data on Tuesday showed China's annual inflation hit a

five-year low in January while factory deflation worsened.

"The muted open comes from more disappointing China data,

this time from January inflation data missing expectations,

delivering yet further disinflation signals and suggesting weak

demand ... but suggesting room for more stimulus," said Mike van

Dulken, head of research at Accendo Markets.

Concerns over weakening demand from China hit oil and gas

stocks, which were also down 1.9 percent. The price

of Brent crude fell under $58 a barrel as the International

Energy Agency (IEA) predicted supply may hit an all time high

despite subdued demand.

Banks fell 1.3 percent, with HSBC down

1.5 percent as global pressure built on the bank over failings

by its Swiss unit.

In all, miners, energy stocks and banks combined to trim

around 30 points off the blue-chip FTSE 100, accounting

for nearly all of its losses. The index 35.40 points, or 0.5

percent lower at 6,801.40 points by 1107 GMT, cutting its gains

for 2015 to around 4 percent.

It underperformed the euro zone's EuroSTOXX 50,

up 0.4 percent, which benefited from its low exposure to

commodity stocks as well as a rally in Greek assets ahead of a

meeting of euro zone finance ministers.

The FTSE 100 reached a peak last year of 6,904.86 points,

its highest since early 2000, before losing ground towards the

end of 2014.

Royal Mail declined by 4.5 percent -- the worst performing

FTSE stock in percentage terms -- after investment bank JP

Morgan (Other OTC: MGHL - news) cut its rating to "neutral" from "overweight".

Supermarket retailer Marks & Spencer (Other OTC: MAKSF - news) rose 2.1

percent after brokerage RBC (Other OTC: RBCI - news) upgraded the stock to "outperform"

from "sector perform".

(Editing by Catherine Evans)