Weaker banks and energy stocks drag FTSE to two-week closing low

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* Blue (OTC BB: BUES - news) -chip FTSE 100 index closes 0.5 pct lower

* Barclays (LSE: BARC.L - news) , RBS (LSE: RBS.L - news) fall after European stress test

* Anglo American (LSE: AAL.L - news) leads miners higher

By Kit Rees

LONDON, Aug 1 (Reuters) - Britain's blue-chip share index hit a two-week closing low on Monday, with energy stocks slipping on weaker crude oil prices and banks losing ground following the results of the European Union's stress test.

Housebuilders also fell after a survey showed that British manufacturing shrank at its fastest pace in more than three years in July. Taylor Wimpey (LSE: TW.L - news) , Berkeley Group, Barratt Developments (LSE: BDEV.L - news) and Persimmon (Other OTC: PSMMF - news) fell 2.8 to 4.5 percent.

The benchmark FTSE 100 index closed 0.5 percent lower at 6,693.95 points, the lowest close since mid-July, after recording its second straight month of gains last month.

Energy stocks led the market lower, with the UK Oil and Gas index falling 2.5 percent as increases in OPEC production and U.S (Other OTC: UBGXF - news) . oil rig additions continued to weigh on oil prices. Shares (Berlin: DI6.BE - news) in Royal Dutch Shell (Xetra: A0ET6Q - news) and BP dropped 2.9 percent and 2 percent respectively.

British banks fell 1.1 percent as shares in Barclays and Royal Bank of Scotland declined 2 percent and 2.9 percent respectively after the European Banking Authority published the results late on Friday of its annual stress test that checked the health of 51 lenders.

Barclays was among the worst-performing banks in the stress test, while Royal Bank of Scotland was also among the top 15 weakest banks.

"The banks are in a much better position than they were, but I think there is a lot of concern around the banks in relation to how heavily linked they are to the UK economy and how interest rate cuts ... (will) play through into their profitability," said Laith Khalaf, senior analyst at Hargreaves Lansdown.

Among other movers, Supermarket Morrison fell 2.3 percent after announcing a round of price cuts. Peers Tesco and Sainsbury (Amsterdam: SJ6.AS - news) were also down 1.1 percent and 1 percent respectively.

Anglo American rose 2.2 percent after RBC (Other OTC: RBCI - news) raised its rating on the stock to "outperform" from "sector perform". UBS also upgraded the miner's earnings outlook following its better-than-expected results last week.

Primark owner Associated British Foods (LSE: ABF.L - news) rose 1.7 percent after Deutsche Bank (LSE: 0H7D.L - news) raised its rating on the stock to "buy" from "hold", citing a positive near term outlook.

"Improving sugar prices, recent currency moves and balance sheet flexibility are all in (Associated British Foods') favour. Primark, the driver of most of ABF's growth in the past decade, continues to power ahead for the long term", analysts at Deutsche Bank said in a note.

(Additional reporting by Atul Prakash; Editing by Catherine Evans)