* FTSE down 2.2 percent as oils drop with crude price * Miners drop with UBS downgrades, copper lows * Banks hit by bearish Merrill note By John Coppock LONDON, Dec. 19 (Reuters) - Britain's FTSE 100 .FTSE index was down 2.2 percent by midday on Friday, led down by energy groups as the oil price neared a five-year low, while more misery was heaped on miners in the form of broker downgrades. Banks were lower after a bearish note from Merrill Lynch, which said they face another "very tough" year in 2009. At 1130 GMT, the FTSE 100 index was 100.46 points lower at 4,230.20. "There's very little to excite the markets on the corporate front," said Jeremy Batstone-Carr, head of private client research at Charles Stanley. "Conditions are ripe for a mini-rally after Christmas, but frankly people will still be thinking about the outlook for 2009. Then we'll get into January and see fourth-quarter earnings come out and a raft of downgrades. "It's going to take a while for the actions taken by the authorities to work through, and until we start to see the first green shoots of recovery, investors will remain very cautious." Energy companies continued to lead the market lower as oil dropped below $36 a barrel to trade near a five-year low. New York crude CLc1 dropped 9 percent on Thursday, despite a production cut by OPEC, on global recession fears. The front-month contract for January expires on Friday; the new crude contract CLc2 priced oil for February delivery at $42.22. BP (BP.L: Quote, Profile, Research, Stock Buzz) fell 4.7 percent to 499 pence, while Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) declined 3.8 percent to 1,744 pence and Cairn Energy (CNE.L: Quote, Profile, Research, Stock Buzz) slipped 6.0 percent to 1,791 pence. Shell shares were further hit by its announcement that it would not drill in Alaska's Beaufort Sea after a court ruling that said U.S. officials failed to consider environmental factors when granting the Anglo-Dutch oil group a permit. Shares in Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz), Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) and Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz), already reeling from plummeting metals prices, were further bashed by downgrades from UBS, which cut all three miners to "neutral" from "buy". Earnings forecasts for Anglo American and Xstrata next year were cut by 83 percent and 85 percent respectively. Antofagasta's 2008 forecasts were trimmed by 9 percent on lower prices for copper, which hit a five-year low in Shangai overnight. Anglo, Xstrata and Antofagasta fell between 8.5 percent and 10 percent.

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