* FTSE 100 falls 2.1 pct
* Financials weigh as US bailout plan hits snags
* Miners, energy stocks track weaker metal and crude prices
(For a TAKE A LOOK on US bailout, click on [])
By Dominic Lau
LONDON, Sept 23 (Reuters) - Britain's top share index shed
2.1 percent by midday on Tuesday as uncertainty over a proposed
U.S. rescue package to save the financial sector weighed on
banks and weak raw material prices hurt commodity stocks.
By 1013 GMT the FTSE 100 <> was down 107.7 points at
5,126.8, extending Tuesday's 1.4 percent losses. The index is
down more than 20 percent for the year.
Banks took a hit, as the planned Washington bailout to shore
up the battered U.S. financial system looked set to drag into
next week as lawmakers haggled over how exactly they could make
Wall Street pay for its rescue. []
Barclays <BARC.L>, HSBC <HSBA.L>, Royal Bank of Scotland
<RBS.L>, Lloyds TSB <LLOY.L>, HBOS <HBOS.L> and Standard
Chartered <STAN.L> lost between 1.4 and 9 percent.
The British Bankers' Association said mortgage approvals
fell 64 percent on the year to a record low in August,
suggesting no end was in sight for the country's housing market
woes. []
"There is increasing concern that overseas investors will
consider and possibly start to reduce exposure to things like
U.S. Treasury bonds, which would potentially undermine the work
that the Federal Reserve and the government are trying to do
there," said Tim Whitehead, head of portfolio services at
Redmayne-Bentley.
"That in itself could force more of a crisis of confidence
than we have already. I don't subscribe to the belief that the
U.S. economic system is in danger of a complete meltdown. But
the amount of exposure the government will have to these toxic
assets is a concern," he said.
Overnight U.S. stocks tumbled, with banks, homebuilders and
big manufacturers among the biggest decliners.
Investors are expected to keep a close watch on the
testimony due to be given by U.S. Treasury Secretary Henry
Paulson, Federal Reserve Chairman Ben Bernanke and Securities
and Exchange Commission Chairman Christopher Cox to the Senate
Banking Committee from 1330 GMT.
Hedge fund group Man <EMG.L> was down 8.1 percent.
LOWER COMMODITIES
Miners sagged along with weaker metal prices. BHP Billiton
<BLT.L>, Rio Tinto <RIO.L>, Anglo American <AAL.L>, Xstrata
<XTA.L>, Vedanta Resources <VED.L> and Eurasian Natural
Resources <ENRC.L> fell 3.1 to 11.3 percent.
Energy stocks also tracked crude prices <CLc1> lower, with
BP <BP.L>, Royal Dutch Shell <RDSa.L>, BG Group <BG.L>, Cairn
Energy <CNE.L> and Tullow Oil <TLW.L> down 0.4 to 4.5 percent.
But with oil prices still higher than a week ago transport
stocks were under pressure. British Airways <BAY.L>, rail and
bus operator FirstGroup <FGP.L> and cruise operator Carnival
<CCL.L> were all down by between 2.7 and 5.7 percent.
"There is no follow through from the $700 billion package,"
said Chris Hossain, senior sales manager at ODL Securities.
"And the feeling is that since short selling has been banned
on financials, it looks like retailers and housebuilders are the
next," he added.
Marks & Spencer <MKS.L> lost 4 percent after Deutsche Bank
downgraded its rating on the retailer to "hold" from "buy",
traders said.
Within the retail sector, Next <NXT.L> languished 4.1
percent and Kingfisher <KGF.L> sagged 5.6 percent.
International Power <IPR.L> added 1.4 percent after
Citigroup upgraded the stock to "buy" from "hold".
Imperial Tobacco <IMT.L>, British American Tobacco <BATS.L>
and GlaxoSmithKline <GSK.L> were also among the handful of
gainers on the index as they were seen as defensives.
Among mid-caps, Mitchells & Butlers <MAB.L> sank 10.6
percent after the pubs operator warned it faced rising costs
next year and will need to accelerate sales growth to maintain
profits.
Tate & Lyle <TATE.L> slumped 13.4 percent after it said it
had lost a U.S. patent case against manufacturers and importers
of Chinese sucralose.
(Editing by Greg Mahlich)
