FTSE dips as commodities drop offsets banks rally

* FTSE falls 0.2 pct as commodities weigh

* Banks rise, adding to previous day's rally

* Investors eye Citigroup results

By Rebekah Curtis

LONDON, July 18 (Reuters) - British blue-chip stocks slipped on Friday, as commodities reversed the previous day's hefty gains, offsetting a rally in banks.

By 0758 GMT the FTSE 100 .FTSE was down 0.2 percent at 5,277.6. The index closed up 2.6 percent on Thursday, when a surge in battered banks was fuelled largely by better-than-expected results from U.S. bank JP Morgan (JPM.N).

Commodities shares were the biggest losers. Oil major BP (BP.L) dropped 0.3 percent and Royal Dutch Shell (RDSa.L) fell 0.5 percent, as crude prices traded well down from recent highs.

Among miners, Xstrata (XTA.L) shed 3.5 percent, while BHP Billiton (BLT.L) and Rio Tinto (RIO.L) both fell 2.5 percent.