Commods, banks pull FTSE down 1.6 pct by midday

                                
 * Commodity stocks top-weighted losers
                                
 * Barclays leads banking sector lower
                                
 * UK in recession after fastest GDP fall since 1980
                                
 LONDON, Jan 23 (Reuters) - Britain's leading share index
fell 1.6 percent by midday on Friday, on course for its fifth
day of losses as commodity stocks and financials weighed and
after confirmation that the UK economy had entered recession.
                                
 By 1114 GMT, the FTSE 100 <.FTSE> was down 63.93 points at
3,988.30, below the 4,000 mark for the first time since early
December last year. The UK benchmark is down nearly 10 percent
this month after plunging more than 31 percent last year -- its
worst annual drop since its launch in 1984.
                                
 Britain went into recession at the end of last year for the
first time since 1991, as the economy shrank at its fastest pace
in nearly 30 years.
                                
 "It's not the fact that we are in recession but it's the
degree which we are in recession that has taken the market
further downward," said Keith Bowman, an equity analyst at
Hargreaves Lansdown.
                                
 "It's still a major question mark hanging over banks in the
UK, the U.S. and almost on a global basis on some degree."
                                
 Barclays <BARC.L> slid 12.7 percent, on course for its
ninth-straight session of losses, on concerns it may require
further capital or be nationalised by the government.
                                
 Chief Executive John Varley said the bank would prefer to
pay the UK government in cash rather than shares if it takes
part in a scheme to insure risky assets.
                                
 Standard Chartered <STAN.L>, Royal Bank of Scotland <RBS.L>,
HSBC <HSBA.L> and Lloyds Banking Group <LLOY.L> lost 0.8 to 4.9
percent.
                                
 A group of lawmakers said the British government must reveal
to taxpayers the full cost of its support for banks during the
financial crisis.
                                
 UBS cut its year-end target for the FTSE 100 to 4,900 from
5,800 and lowered its forecasts for dividend growth to 7 percent
for 2009 from 14 percent.
"Sterling weakness is helping to support UK dividends, but
the risks remain biased to the downside," the broker said in a
note.
                                
 Sterling <GBPJPY=R> hit a record low against the yen as
losses in the pound mounted after the GDP data.
                                
 SLIPPERY OILS, DULL METALS
                                
 Oil producers took the most points off the index as crude
prices <CLc1> eased. BP <BP.L>, Royal Dutch Shell <RDSb.L>, BG
Group <BG.L> and Tullow Oil <TLW.L> were down between 1.1 and
2.1 percent.
                                
 Miners also languished, with Anglo American <AAL.L>, BHP
Billiton <BLT.L>, Rio Tinto <RIO.L>, Kazakhmys <KAZ.L>, Xstrata
<XTA.L> and Vedanta Resources <VED.L> off 2.9 to 4.3 percent.
                                
 Insurers fell on investor jitters ahead of fourth-quarter
earnings from major U.S. counterparts next week, with vague talk
of financial difficulties in the sector in Germany further
weighing on sentiment.
                                
 Aviva <AV.L>, Legal & General <LGEN.L>, Old Mutual <OML.L>
and Prudential <PRU.L> dropped 6.4 to 10.9 percent.
                                
 AstraZeneca <AZN.L> added 1.1 percent. The Wall Street
Journal said Pfizer <PFE.N>, the world's largest drugmaker by
revenue, is in talks to acquire rival Wyeth <WYE.N> in a deal
that could be valued at more than $60 billion.
  (Editing by Simon Jessop)