* Tracks weakness in Asia as economic worries persist
* Miners, banks hardest hit as investors shun risk
By Harpreet Bhal
LONDON, Aug 17 (Reuters) - Britain's top share index fell 1.2 percent in early trade on Monday, tracking weakness in Asia and pre-weekend on Wall Street as jitters about the health of the U.S. economy prompted heightened risk aversion.
By 0804 GMT, the benchmark FTSE 100 was 56.96 points lower at 4,657.01, extending losses from Friday when the index shed 0.9 percent after data showed a fall in U.S. consumer confidence.
The disappointing data cast doubts on the pace of global recovery.
"We seem to have been a bit spooked with the U.S. consumer confidence figures and that has followed through into the Far East. The out-of-hours U.S. markets as well have taken a bit of a battering," said David Morrison, market strategist at GFT Global.
"It all just feels like we're running out of steam (on the FTSE). We've had a great summer so far. The index might be taking a breather and pausing a bit or it might be the start of a realisation that we have really overcooked this."
Miners took the most points off the index. Fresnillo shed 2.6 percent after it posted a 14 percent drop in first-half profits on lower silver prices, but said it was upbeat about the remainder of the year.
BHP Billiton, Eurasian Natural Resources, Kazakhmys, Lonmin and Vedanta Resources dropped 1.1 to 3.2 percent.
The China Iron and Steel Association (CISA) said it would negotiate with the three top iron ore miners using a price it agreed with Australian miner Fortescue Metals Group as a reference.
However, Australia's largest miner Rio Tinto said it does not see a price pact between Fortescue Metals and China's largest steelmaker Baosteel as establishing an industry-wide price.
Xstrata was reported to have redoubled its attempt to win over the investors of its rival and merger target Anglo American , the Guardian newspaper said on Monday.
It also hopes that Anglo's new chairman Sir John Parker will be more receptive to the benefits of a tie-up than the rest of the board, who have so far been unreceptive to the deal. Xstrata fell 3 percent while Anglo American lost 2.6 percent.
Banks were also lower as investors cut back on risky positions. HSBC, Lloyds Banking Group and Standard Chartered were down between 0.8 and 2.1 percent.
Royal Bank of Scotland shed 2 percent after the lender said Britain's financial regulator has launched a supervisory review of the Scottish bank's takeover of ABN Amro.
Barclays was down 1.8 percent. Barclays is attempting to recruit five JP Morgan investment bankers with a bonus package worth a total of 30 million pounds, the Sunday Telegraph reported, without citing sources.
On the upside, Aviva was the biggest riser, up 0.9 percent after HSBC upgraded the insurer to "neutral" from "underweight" and raised its price target to 400 pence from 320 pence.
Drugmakers, traditionally viewed as defensive stocks, were also higher, with AstraZeneca and GlaxoSmithKline adding 0.5 and 0.1 percent.
HOUSE PRICES DECLINE
Asking prices for homes in England and Wales are on average 3.1 percent lower this month than a year ago, property web site Rightmove said.
That matched July's annual fall, but a monthly decline of 2.2 percent this month more than reversed July's 0.6 percent rise from June, leaving the average price of a home at 222,767 pounds.
Britain's economy should return to growth in the second half of 2009, although the speed of recovery will depend on the effect of bank lending constraints and the state of the global economy, BoE policymaker Andrew Sentance said in an article for the Sunday Times newspaper
With no economic data from the UK due on Monday, investors will look ahead to the afternoon release of the U.S. Empire State index for August, which is expected to rise to 1.00, up from -0.55 in July.
The U.S. NAHB housing market index for August is also due later on Monday, with economists expecting a reading of 18, up from 17 in July.
(Editing by John Stonestreet)