* FTSE down 0.2 percent after seven days of gains
* Miners take most points off index * Defensive stocks gain as risk appetite retreats
By David Brett
LONDON, July 22 (Reuters) - Britain's top share index drifted lower in mid-session trade on Wednesday, as mining stocks and banks retreated following recent rallies as investors took a breather after a seven-day winning streak.
By 1046 GMT the FTSE 100 was down 10.23 points, or 0.2 percent, at 4470.94.
Volume was light but marginally on the downside with miners weighing heaviest on the FTSE as investors booked profits after a recent rally on the back stronger raw materials prices
Rio Tinto, Kazakhmys, Eurasian Natural Resources, Anglo American, Lonmin and BHP Billiton fell between 0.6 and 4 percent.
"After some fantastic gains we're a little bit more cautious this morning. We've moved from the bottom to the top of equity trading range in a short space of time, probably the market needs time to pause for breath," said Henk Potts, strategist at Barclays Stock Brokers
"There's a lot of hope priced in about the strength of the recovery ... hope is a good breakfast but a poor supper, eventually we'll have to see some meat on the table if the rally is to be sustained."
Insurers, which tend to be sensitive to retreating risk appetite, were among the biggest fallers.
Aviva, Friends Provident, Legal & General, Prudential, Standard Life and Standard Life fell between 1.7 and 2.8 percent.
Confederation of British Industry industrial data showed that its manufacturing order book fell to its lowest since January 1992.
Other data also reminded investors that the UK economy faces a long, slow road to recovery.
Britain's economy will return to growth in the last quarter of the year, as companies start to rebuild inventories, but strong growth will not return until 2013, the National Institute of Economic and Social Research said.
Banks were mostly lower. Barclays, Standard Chartered, Royal Bank of Scotland and Lloyds Banking Group fell 0.1 to 2.1 percent but heavyweight HSBC added 0.6 percent.
OILS IN DEMAND
Traders went after oil stocks as crude held its price just below $65, off the lows earlier in July.
BG Group and Cairn Energy rose 2.1 and 0.7 percent, respectively, but heavyweight BP lost 0.3 percent.
Defensive stocks were also in demand, with tobacco stocks, utilities and food producers among the main supports for the index.
British American Tobacco added 0.6 percent and Severn Trent gained 1.2 percent.
Severn Trent extended Tuesday's gains, which followed an in-line trading update, with broker Nomura saying that shares in water companies have been overly pessimistic ahead of Thursday's price determination by regulator OFWAT.
Pharma groups AstraZeneca and Shire also moved higher, up 1.4 and 1.2 percent, respectively, but GlaxoSmithKline missed out, losing 1.1 percent ahead of the firm's second-quarter results, due at 1100 GMT.
London Stock Exchange shares fell 2.9 percent as stock traded ex-dividend.
Across the Atlantic, U.S. Federal Reserve Chairman Ben Bernanke said on Tuesday that the outlook for the long-suffering U.S. economy was improving, but supportive policies would be needed for some time to prevent rising unemployment from undercutting recovery. (Editing by Karen Foster)