* FTSE 100 down 1.2 pct
* Financials drop after Fed meeting
* BoE splits on rates, paving way for May rise
* Reckitt jumps after ditching Pfizer unit bid
* Ted Baker under pressure after outlook comments (Adds details, closing prices)
LONDON, March 22 (Reuters) - The UK's top share index fell below a key level on Thursday, hit by concerns over potential trade wars and following a hawkish surprise from the Bank of England's policy meeting.
The BoE kept interest rates on hold but two policymakers unexpectedly voted for a hike, cementing expectations that borrowing costs will rise in May.
"This meeting can certainly be interpreted as a step towards a hike in May. The pound ran out of steam having already had an exceptional week and having rallied hard into the announcement," Fiona Cincotta, Senior Market Analyst at City Index. "The FTSE fell steadily on the back of the stronger pound."
The FTSE 100 fell below 7,000-point as the outcome of the BoE meeting briefly lifted the pound further. The index ended down 1.2 percent at 6,952.59 points to a 15-month low.
Financials were the biggest sectoral weight on the index, wiping off around 30 points as shares in big international banks HSBC and Barclays fell more than 2 percent following guidance from the U.S. Federal Reserve which was less hawkish than expected.
Domestically focused banks, however, which are more sensitive to expectations over domestic interest rates, slightly outperformed their international peers. RBS fell 1.4 percent and Lloyds Bank ended down 1.6 percent.
Elsewhere jitters over U.S. import tariffs were in focus. U.S. President Donald Trump signed a presidential memorandum that could impose tariffs on up to $60 billion in Chinese import.
Shares in Micro Focus were the biggest fallers, down 6.3 percent after Moody's changed its outlook on the software company's ratings to negative, following issues Micro Focus flagged earlier in the week around its purchase of Hewlett Packard Enterprise assets.
A jump in Reckitt Benckiser's shares provided some relief, with the consumer goods giant up 4.8 percent at the top of the index.
Shares in Reckitt rose after the company pulled out of the bidding for Pfizer's consumer health unit, assuaging worries that Reckitt would need to over-leverage or consider a dilutive rights issue.
"Investors need to be wary of firms which make multiple acquisitions, especially if they are big, and seen or described as transformational as the scope for something going wrong is considerable," Russ Mould, investment director at AJ Bell, said.
Shares in pharma stock GlaxoSmithKline declined 1.7 percent. It might now have a better chance of buying the Pfizer business but analysts were concerned that a potential deal could put pressure on its finances.
Among mid caps, Ted Baker was the latest retailer to feel the heat as its shares dropped 12.9 percent.
The fashion retailer cautioned over a tough global environment ahead despite a 12 percent rise in annual pretax profit thanks to higher online sales.
Nevertheless analysts at Liberum said that Ted Baker's results showed a "solid performance," especially against such a tough backdrop.
(Reporting by Kit Rees and Danilo Masoni Editing by Raissa Kasolowsky)