FTSE retreats from highs, Russia sanctions weigh

* FTSE 100 index down 0.6 percent

* BP (LSE: BP.L - news) , Rexam (LSE: REX.L - news) down following new sanctions on Russia

* ITV (LSE: ITV.L - news) gains after share purchase by Liberty

By Atul Prakash

LONDON, July 17 (Reuters) - Britain's top share index retreated from a one-week high on Thursday, with firms like BP and can maker Rexam slipping after new Western sanctions on Russia over the Ukraine crisis.

The blue-chip FTSE 100 index was down 0.6 percent to 6,744.10 points by 1145 GMT after hitting a week-high in the previous session, when mining companies rose on positive growth data from China, the world's largest metals user.

Oil major BP, down 1.56 percent, took the most points off the FTSE 100 after the United States imposed the toughest sanctions yet on Russia over what Washington says is Moscow's failure to curb separatist violence in eastern Ukraine.

The targets included Russia's largest oil producer Rosneft , in which BP owns 20 percent, and which accounts for around a quarter of its production.

"The FTSE is under pressure due to reinforced sanctions by the United States on Russia. BP, which holds a significant stake in Rosneft, is having the biggest impact on the UK index," Mike van Dulken, head of research at Accendo Markets, said.

Rexam, which generates about 7 percent of its total revenue from Russia, was down 2.6 percent. A downgrade by Deutsche Bank (Xetra: 514000 - news) to "hold" from "buy" on factors including stretched valuations also added to the selling pressure.

"Geopolitical worries continue to make the headlines ... That combined with the summer doldrums means that there is no rush to get involved buying stocks," said Lex van Dam, a hedge fund manager at Hampstead Capital.

Britain's biggest sporting goods retailer, Sports Direct , posted a 20 percent rise in full-year profit and said it had made up with Adidas AG (Other OTC: ADDDF - news) after a row over supplies of soccer boots and shirts.

But its shares fell 2.45 percent, with analysts saying that the stock was not cheap given the uncertainties regarding Adidas and corporate governance. The Sports Direct board has wrestled for years over bonus payments to founder Mike Ashley.

ITV surged 5.77 percent after cable group Liberty Global bought a stake in the free-to-air broadcaster.

ITV rose after the move by its biggest shareholder BSkyB to sell 6.4 percent of the company to Liberty Global (NasdaqGS: LBTYA - news) sparked hopes for a full takeover.

"ITV is now likely to be seen as a potential M&A story," analysts at Liberum wrote in a note. "We would not expect an immediate bid: but Liberty's purchase suggests it may be interested in acquiring the asset at some point as Virgin Media (which Liberty owns) tried to do nearly a decade ago."

ITV's trading volumes were nearly five times its 90-day daily average, against just 30 percent of the 90-day average for the FTSE 100 index.

Analysts said that a weakness in the broader market was also due to strong gains in the past sessions and ahead of earnings announcements by some major companies.

Earnings from companies such as British land (LSE: BLND.L - news) , ARM Holdings and GlaxoSmithKline (Other OTC: GLAXF - news) are due in the coming sessions.

"We had a strong bounce over the last few days and it's a bit of retracement from that. It's not surprising that people would use the earnings season to take some profits when the earnings numbers have been somewhat mixed," Graham Bishop, senior equity strategist at Exane BNP Paribas, said. (Additional reporting by Tricia Wright; Editing by Mark Trevelyan)