Aston Martin Lagonda Share News (AML)

July 22 (Reuters) - Britain's domestically focused index outperformed the blue-chip FTSE 100 for its third straight week on Friday, with insurer Beazley topping the mid-cap index following a strong annual forecast.

The commodity-heavy FTSE 100 edged 0.1% higher and ended the week 1.8% higher, its best weekly performance in nearly a month.

Miners rose 1.2%, while oil major Shell climbed 0.5% as investors returned to riskier assets following a brutal sell-off.

Capping gains on the blue-chip index, banks fell 1.2% on fears of a global economic slowdown, a day after Europe's central bank raised interest rates by a more-than-expected 50 basis points in its first hike in 11 years.

"It looks as if an economic slowdown is on the card," said David Madden, market analyst at Equiti Capital.

"Banks will probably look to start increasing their bad loss loan provisions because of what's going to happen in three months or six months time with a slower economy."

Investors eyed earnings by major British banks like NatWest Group, Barclays and Lloyds in the next few days.

Meanwhile, the domestically focused mid-cap index rose 0.6%, ending the week 5.2% higher, helped by strong earnings updates.

Beazley jumped 9.4% to top the index as the insurer raised its full-year profitability forecast on an increase in cyber risk premiums.

Aston Martin fell 8.7% as Jefferies cuts its price target after the luxury carmaker raised funds last week.

Data showed retail sales edged down in June as drivers cut back on fuel amid record high prices. While shopping trends remained weak as households struggle with surging inflation, the drop was less than expected.

Britain's economy is feeling the strain of inflation, which is on course to hit double digits. The Bank of England is expected to raise interest rates for a sixth time since December on Aug. 4, potentially adding to the drag on economic growth.

British consumers' confidence remained stuck at a record low this month, another survey showed on Friday.