* Banks fall; Goldman's rating cut
* Investors eye U.S.; Johnson & Johnson and Intel results
* UK September inflation data misses expectations
* U.S. Q3 results in focus
By David Brett
LONDON, Oct 13 (Reuters) - Britain's FTSE 100 share index was down 0.1 percent by mid-session on Tuesday, as banks retreated following a downgrade of U.S. giant Goldman Sachs and while investors awaited U.S. corporate results.
By 1035 GMT the FTSE 100 was 5.73 points lower at 5204.44, having gained 48.30 points, or 0.9 percent to 5,210.17 on Monday, its highest close since late September 2008.
"It could be an emotional and rocky third quarter both sides of the pond," said Manus Cranny Senior Market Commentator of MF Global Spreads.
"UK banks are decidedly queasy on the back of the Goldman Sachs downgrade (by Meridith Whitney Banking Associates) and it is Barclays that will bear the brunt of a shift in sentiment in the banking sector," he said.
British banks were weaker as investors awaited results later this week from several U.S. peers. Barclays shed 2.9 percent, while Lloyds Banking Group, Royal Bank of Scotland, and Standard Chartered lost 1.1 to 2.5 percent.
HSBC shed 1 percent after SABB, its Saudi affiliate, reported a worse than expected 19.8 percent fall in third-quarter net profit, hit by an increase in the scale of its provisions for bad loans.
U.S. banks JP Morgan Chase, Citigroup, Goldman Sachs and Bank of America are all scheduled to release third-quarter results later this week.
Later on Tuesday earnings data is expected from healthcare firm Johnson & Johnson and, after the U.S. markets close, from the world's biggest chip-maker Intel.
U.S. stock index futures pointed to a slightly lower opening on Wall Street, with futures for the S&P 500, Dow Jones and Nasdaq 100 all down around 0.1 percent.
Life insurers fell as investors banked profits following the sector's recent good run, which has been underpinned by M&A speculation.
Legal & General, a rumoured target for Resolution dipped 2.7 percent, while Aviva, Prudential and Friends Provident fell 1.1-1.9 percent.
MINERS MIXED
Heavweight mining stocks were mixed with some profit taking following Monday's rally, offset by bullish news from Kazakhmys and gold hitting an historic high during the session.
Among the fallers, Eurasian Natural Resources, Vedanta Resources, Antofagasta and BHP Billiton shed 0.2 to 1.6 percent.
Copper producer Kazakhmys gained 1.5 percent after the company announced it was in negotiations over a potential $2 billion loan facility to help fund major growth projects.
Rio Tinto delivers a third-quarter production update on Wednesday. For a preview, double-click on.
Among individual risers Whitbread topped the blue chip gainers chart, up 2.3 percent, after Britain's biggest hotel and restaurant operator's first-half pretax results impressed investors by beating expectations.
Energy shares rose as the crude oil price steadied above $74 a barrel.
BG Group, Royal Dutch Shell and Cairn Energy added between 0.1 and 1.2 percent.
Tobaccos and beverages were among the top performing sectors as defensive considerations returned, with drinks group Diageo up 0.9 percent and British American Tobacco ahead 1 percent.
Investors pushed aside weaker than expected British consumer price inflation data, which hit its lowest annual rate in five years.
The Office for National Statistics said the annual rate fell to 1.1 percent, the lowest since September 2004 and below analysts' forecasts for an easing to 1.3 percent.
Inflation is now well below the Bank of England's 2 percent target, as a result sterling fell against a basket of currencies. (Editing by Greg Mahlich)