Britain's FTSE retreats, Polymetal slumps

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* FTSE edges back, but still up over the course of the week

* Polymetal slumps after share placement

* FTSE 100 up around 10 pct so far in 2016

By Sudip Kar-Gupta

LONDON, Sept 23 (Reuters) - Britain's top shares index slipped lower on Friday, after a rally this week pushed it near its highest level for 2016, as a fall in Polymetal and other mining stocks weighed on the market.

The blue-chip FTSE 100 index, which had risen for the last four sessions in a row to approach its 2016 peak of 6,955 points, was down 0.3 percent at 6,894.47 points.

Polymetal was the worst-performing FTSE 100 stock, sliding 8.5 percent after two of its private equity owners announced the sale of 6 percent of the company.

A drop in the price of gold also pushed down the shares of Randgold Resources and its rival Fresnillo (Frankfurt: A0MVZE - news) .

The FTSE and other world stock markets had rallied this week after the Federal Reserve decided not to raise U.S. interest rates for now, with the FTSE still up by more than 2 percent over the week.

Rates may still rise in December in the United States, but they remain at record lows in Britain and the euro zone, hitting returns on bonds and cash and driving investors towards the better returns available from the stock market.

"My long-term view is the market will continue to push on. We remain a buyer of dips, and I expect the FTSE to finish the year strongly," said Roderic Owen-Thomas, director at London-based trading firm Mayfair Capital Limited.

The FTSE 100 is up around 10 percent so far in 2016, after a Bank of England rate cut helped the FTSE to recover from Britain's vote in June to quit the European Union. (Editing by Larry King)