* Oil majors fall, reversing previous session's gains
* J Sainsbury leads food retailers down after results
* U.S. corporate earnings season eyed
By Harpreet Bhal
LONDON, Oct 7 (Reuters) - Britain's leading shares closed lower on Wednesday as falls in oil majors and food retailers offset gains in insurers as investors waited for the start of the earnings seasons in the U.S. to give a fresh direction.
The FTSE 100 closed down 29.08 points, or 0.6 percent, at 5,108.90, after ending 2.3 percent higher on Tuesday on growing confidence over the outlook for the global economy.
Oil majors took the most points off the index, with BP, BG Group, Royal Dutch Shell and Tullow Oil off 1.2 to 2.9 percent as investors' took profits in the sector.
Trading on Wall Street was mixed ahead of the start of the earnings season, which U.S. aluminium giant Alcoa which kick off after markets close on Wednesday.
The FTSE 100 has risen 48 percent since hitting a floor in March on hopes of a recovery in the economy and analysts predict that the rally may still have some fuel to push higher after raking in hefty gains in the third quarter of the year.
"With the FTSE continuing to trade above the 5,000 mark, it seems that investors are willing to let this latest bout of recovery continue before hitting the sell button," said Anthony Grech, a market strategist at IG Index.
Food retailers dipped as J Sainsbury fell 3.3 percent after releasing its second-quarter trading update, which met forecasts with a slight slowdown in quarterly sales growth.
Peers WM Morrison lost 0.8 percent, while Tesco, which posted its first-half results on Tuesday, shed 2.3 percent.
Among other individual stocks, Vodafone dipped 2 percent, dented by a fall in India telecom stocks and the possibility of a tariff war.
Hip and knee specialist Smith & Nephew fell 2.7 percent as UBS downgraded its recommendation on the stock to "neutral" from "buy", citing caution over the growth of the orthopaedic market.
INSURERS ADVANCE
Aviva, which rose 3.8 percent, led life insurers higher. The company announced plans for a secondary listing on the New York Stock Exchange on October 20.
The sector has been high on investors' wanted list recently due to M&A speculation. Standard Life, Prudential and Old Mutual gained 1.4 to 2 percent
Intercontinental Hotels rose 3.3 percent, supported by an upgrade by Citigroup to its rating to "buy" from "hold"
Banks were mixed. HSBC and Barclays rose 0.6 and 0.1 percent, respectively, while Royal Bank of Scotland, Lloyds Banking Group and Standard Chartered shed 0.9 to 2 percent.
HSBC, Europe's largest bank, said it would be forced to delay raising its dividend if new capital rules were applied too heavily or quickly, the Times reported the bank's head of investment bank as saying.
Kingfisher rose 1.9 percent after UBS upgraded its recommendation on Europe's largest home improvement retailer to "buy" from "neutral" and Morgan Stanley upped its stance to "equal-weight" from "underweight.
Admiral Group and WPP Group fell after trading ex-dividend.
Earlier data showed British corporate profitability fell to its lowest rate in 8 years in the second quarter of 2009 driven by a steep fall in gas prices which hit energy producers.
On the employment front, a survey in the UK by the Recruitment and Employment Confederation and accountancy firm KPMG showed the number of permanent job placements in Britain continued to grow in September and rose at their fastest pace in 18 months. (Editing by Karen Foster)