Banks send Britain's FTSE to 15-month low; Reckitt rally some relief

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* FTSE 100 down 0.5 pct, briefly dips under 7,000 points

* Financials drop after Fed meeting; BOE in focus

* Reckitt jumps after ditching Pfizer unit bid

* Ted Baker under pressure after outlook comments

By Kit Rees

LONDON, March 22 (Reuters) - The UK's top share indexdeclined on Thursday as concerns over potential trade warsweighed on sentiment and traders focused on an upcoming policydecision by the Bank of England.

Britain's blue chip FTSE 100 index was down 0.5percent at 7,001.57 points by 1000 GMT, briefly dipping belowthe 7,000-point level to a fresh 15-month low at its open.

Financials were the biggest sectoral weight on the index,wiping off around 13 points as shares in HSBC, Barclaysand Standard Chartered all fell more than 1percent.

Banks, which are seen as beneficiaries of higher interestrates, fell following guidance from the U.S. Federal Reservewhich was less hawkish than expected.

"The Fed failed to lift the future path of hiking for 2018,something, keeping the outlook at three rises across the year,rather than the four some traders had been optimistically hopingfor," Fiona Cincotta, senior market analyst at City Index, said.

Traders awaited a policy decision from the Bank of England,which was expected to keep interest rates unchanged as it clearsa path for an interest rate rise in May.

Sterling traded higher ahead of the BOE meeting, puttingpressure on the FTSE.

Elsewhere jitters over U.S. import tariffs were in focus asa summit of European Union leaders gathered to discuss how bestto enter into a trade dialogue with U.S. President Donald Trump.

The U.S. tariffs on steel and aluminium imports, set toenter into force on Friday, and have stoked worries about risingprotectionism in global trade and the impact this might have ongrowth.

Shares in Micro Focus were the biggest fallers,down 5.5 percent after Moody's changed its outlook on thesoftware company's ratings to negative, following issues MicroFocus flagged earlier in the week around its purchase of HewlettPackard Enterprise assets.

Thursday's share price fall took Micro Focus' losses to 51percent for the week, its worst weekly decline on record.

Elsewhere companies trading ex-dividend weighed, withSchroders down 2.5 percent and British American Tobaccofalling 1.4 percent, while a trading update putpressure on engineering firm Halma.

A jump in Reckitt Benckiser's shares provided somerelief, with the consumer goods giant up 5.7 percent at the topof the index.

Shares in Reckitt rose after the company pulled out of thebidding for Pfizer's consumer health unit, assuagingworries that Reckitt would need to over-leverage or consider adilutive rights issue.

"Investors need to be wary of firms which make multipleacquisitions, especially if they are big and seen, or described,as transformational as the scope for something going wrong isconsiderable," Russ Mould, investment director at AJ Bell, said.

Shares in pharma stock GlaxoSmithKline declined 1percent. It might now have a better chance of buying the Pfizerbusiness but analysts were concerned that a potential deal couldput pressure on its finances.

Among mid caps, Ted Baker was the latestretailer to feel the heat as its shares dropped 7.7 percent.

The fashion retailer cautioned over a tough globalenvironment ahead despite a 12 percent rise in annual pretaxprofit thanks to higher online sales.

Nevertheless analysts at Liberum said that Ted Baker'sresults showed a "solid performance", especially against such atough backdrop.

(Reporting by Kit Rees; Editing by Jon Boyle)