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* FTSE 100 up 0.2 pct
* Financials rise after Fed signals Dec rate hike
* Strong dollar hits precious metals miners
* Capita slumps after weak H1 results
LONDON, Sept 21 (Reuters) - Gains among banking stocks boosted the UK's top share index on Thursday after the U.S. Federal Reserve signaled that another rate rise was on the cards for this year, though a stronger dollar hampered heavyweight commodities-exposed miners.
The blue chip FTSE 100 index was up 0.2 percent at 7,282.72 points by 0852 GMT, underperforming a broadly positive European market which was boosted by gains among banking stocks.
British banks were among the strongest FTSE gainers, with Barclays, Royal Bank of Scotland and Lloyds all up between 1 percent to 2.8 percent after the U.S. Federal Reserve signaled that it expects one more rate hike by the end of the year, seen likely to be in December.
Banks have struggled in a low interest rate environment, as this has put pressure on their margins. The sector was boosted recently by more hawkish rhetoric from the Bank of England, which said that a rate rise was likely in the coming months.
"The decisions at the Federal Reserve came in in-line," Ken Odeluga, market analyst at City Index, said, adding that net interest income for the largest global banks has started to grow for the first time in many years.
The increased expectations of a Fed rate hike boosted the dollar, which in turn weighed on Greenback-denominated commodities such as copper and gold.
Shares in precious metals miners Fresnillo and Randgold Resources were the biggest fallers, down 2.7 percent and 2.4 percent respectively, while Antofagasta also declined 2.4 percent.
Deal-making spurred a 3 percent jump in CRH's shares, among the biggest FTSE gainers. The building materials maker rose after agreeing to buy U.S. cement maker Ash Grove Cement Co in a $3.5 billion deal to expand in North America.
"We think the transaction marks a strategic entry into the U.S. cement market at a reasonable price, where CRH currently only has a small presence and will complement its significant aggregates, asphalt and ready mix operations," analysts at UBS said in a note.
Outside of the blue chips, results prompted some large moves among British mid cap firms, with shares in construction and services firm Kier Group soaring 7.8 percent after reporting a 3.5 percent rise in full-year profit.
Troubled outsourcer Capita did not fare as well after its own update, with its shares slumping more than 11 percent to their lowest level in three months after a set of disappointing first half results.
"A disappointing set of numbers in our view likely to lead to some modest earnings downgrades," analysts at Stifel said in a note.
(Reporting by Kit Rees; Editing by Toby Chopra)