* Oils, miners fall with weak commodity prices
* Banks under pressure on continuing break-up fears
* Drugmakers cautious ahead of results
By Jon Hopkins
LONDON, Oct 28 (Reuters) - Britain's leading shares were 1.8 percent lower around midday on Wednesday, with falls by heavyweight oils, miners and banks dragging the FTSE 100 index to a three-week low.
At 1142 GMT the benchmark index was down 93.39 points at 5,107.58, on track for the biggest daily percentage fall since the start of September and, with three sessions to go, the first monthly decline since June.
"For the moment financial markets have clearly stagnated, with a realisation hitting home that all the warnings of a return to growth being a long and painfully slow process are not just hot air," said David Jones, Chief Market Strategist at IG Index.
"There is a growing sense that the comeback has been too much, and the question is whether the FTSE can now hold steady amid the current negativity," Jones added.
Miners took the most points off the index, reflecting lower metal prices as doubts over the demand outlook resurfaced.
Xstrata was the top FTSE 100 faller, down 6.7 percent, while Kazakhmys, Lonmin, Rio Tinto, BHP Billiton shed 3.4 to 6.1 percent.
Vedanta Resources lost 4.5 percent, with the extra hit of a Barclays Capital downgrade to "equal weight".
Energy stocks fell, having rallied strongly on Tuesday on the back of BP's good numbers, as crude prices fell below $79 a barrel.
BG Group fared worst among the oil majors, down 2.7 percent, after posting a 44 percent drop in third-quarter net profit to 484 million pounds as gas and oil prices plummeted, though its underlying profits beat forecasts.
Broker downgrades put pressure on BP, off 1.6 percent, with Citigroup cutting its rating for the oil major to "hold" from "buy" on its judgement that the firm's operational recovery is peaking.
Royal Dutch Shell lost 1.5 percent, and oil explorers Tullow Oil and Cairn Energy shed 3 and 3.3 percent.
The banking sector extended its decline, with the break-up of Dutch financial services group ING continuing to weigh heavily on its UK peers.
Investors are unsettled by mounting fears over the disposals government-backed banks will have to make in order to satisfy the European Commission.
Royal Bank of Scotland, Lloyds Banking Group, Barclays, Standard Chartered, and HSBC fell between 1 and 3.9 percent.
Lloyds Banking Group, Royal Bank of Scotland and Northern Rock will be broken up and parts of their businesses sold off to create three new banks, the Independent newspaper said, quoting government sources.
Investors were also uneasy as they awaited further developments on regulatory change following moves across the Atlantic.
Life insurers were also weak, with Prudential, Legal & General, Old Mutual and Standard Life down 2.2 to 6.05 percent.
Prudential posted a better than expected 9 percent drop in third-quarter sales on Wednesday, as its Asian region and U.S. businesses offset weakness at home.
DRUGS AWAITED
Drugmakers were weak, reversing earlier gains awaiting results in the sector.
GlaxoSmithKline shed 1.1 percent ahead of its third-quarter results at 1200 GMT, AstraZeneca lost 1.9 percent, and Shire, which reports on Friday, was flat, having given up earlier gains.
Telecoms were the biggest sectoral gainers, with mobile heavyweight Vodafone up 0.7 percent, and fixed-line peer BT Group ahead 0.4 percent as Barclays Capital initiated coverage on the European sector with a positive view.
U.S. stock index futures fell on Wednesday, with more company results and durable goods and housing sales figures due as investors seek insight into the health of the economy a day after disappointing consumer confidence data. (Reporting by Jon Hopkins, editing by Will Waterman)