FTSE posts lowest close in three weeks, though HSBC leads banks

* FTSE 100 down 0.2 pct at close

* HSBC leads banking index higher

* Next shares gain after update (Adds detail, updates prices at close)

By Kit Rees and Atul Prakash

LONDON, Aug 3 (Reuters) - Britain's top share index dippedto close at its lowest level in three weeks on Wednesday, withweaker commodities and property-related stocks offsetting anHSBC-led rally in banking stocks.

The blue-chip FTSE 100 index was down 0.2 percent at6634.40 points, its lowest close in three weeks. The index's 5percent rally since Britain voted to leave the European Union islosing steam, and the market faced some selling pressure in thepast days.

Banks were the top performers, with HSBC helping the UKbanking index to gain more than 3 percent.

HSBC shares rose 4.5 percent after Europe's biggest bankcheered investors by announcing plans to buy back up to $2.5billion of its shares, despite reporting a 29 percent slump inits first-half profits.

"This reflects the decision by management to return half ofthe capital gain generated from the disposal of the group'sBrazilian operations ... (but it) has dropped its progressivedividend policy," Shore Capital analyst Gary Greenwood said.

"So while giving with one hand, (the) management is at thesame time taking away with the other."

Other banks also gained, with both Royal Bank of Scotland rising 2.6 percent and Standard Chartered jumping 4.2 percent after reporting a return to profit in itsown results.

However, commodities-related stocks lost ground again. TheUK mining index fell 0.2 percent, tracking lossesin major industrial metals.

Shares in Rio Tinto were down 0.8 percent, alsoafter the global miner reported a 47 percent slump in first-halfprofit to its weakest in 12 years. However, losses were limitedas it surprised the market with a higher-than-expected dividend.

Property-related stocks also fell on lingering concernsabout the pace of economic growth in Britain after the countryvoted in late June to leave the European Union.

A closely watched business survey said on Wednesday thatBritain's economy was shrinking at its fastest rate since the2008-09 financial crisis, making a Bank of England rate cut onThursday "a foregone conclusion".

Shares in Persimmon, Berkeley Group, TaylorWimpey and Intu Properties fell between 1.8percent to 2.7 percent.

Among other movers, Next rose 4.1 percent afterreporting a pick up in sales in its fiscal second quarter fromthe first. (Reporting by Atul Prakash; Editing by Janet Lawrence)