Britain's FTSE slips to two-week low on Ukraine tensions

* FTSE 100 down 1 pct, hits 2-week low

* Geopolitical concerns hurt cyclicals like banks

* Miners further hit by weaker metals prices

By Atul Prakash

LONDON, March 3 (Reuters) - Britain's top share index fell sharply to a two-week low on Monday, with cyclical shares bearing the brunt of the sell-off, as investors' appetite for riskier assets fell due to growing tensions in Ukraine.

Banks, insurers, mining and energy stocks were among the big losers after Ukraine mobilised for war following Russian President Vladimir Putin's declaration that he had the right to invade his neighbour. The confrontation over Ukraine is the biggest between Moscow and the West since the Cold War.

Oil major BP (LSE: BP.L - news) , which has a significant stake in Russia's biggest oil producer Rosneft, fell more than 1 percent on concerns of an escalation in tensions. Rosneft shares slumped more than 8 percent.

The UK banking index, which fell 1.7 percent to become the biggest sectoral decliner, put pressure on the broader market. The blue-chip FTSE 100 index was 1 percent lower at 6,742.18 points by 0904 GMT, after falling to 6,698.24, its lowest since mid-February.

"Clearly the market is in a risk-off mode on the back of the geopolitical developments, the most concerning for Europe since the end of the cold war. All eyes will be on whether it spreads," said Daniel McCormack, strategist with Macquarie.

"But I doubt that there will be a major sell-off as a result of this. It appears that the West is not going to intervene militarily, so this escalating into a full-blown war is very unlikely. The market is also supported by macroeconomic factors and central banks."

The UK mining index, down 1.3 percent, was hurt by the geopolitical concerns and falling metals prices, which slipped on data showing a further drop in factory activity in China, the world's top metals consumer.

The final Markit/HSBC manufacturing Purchasing Managers' Index (PMI) for China fell to a seven-month low of 48.5 in February from January's 49.5, its third straight monthly decline, reinforcing concerns of a slowdown in the world's second largest economy.

Among individual movers, car and plane parts maker GKN (Berlin: GKN.BE - news) fell 2.5 percent, with traders citing a UBS (Xetra: UB0BL6 - news) downgrade to "neutral" from "buy".