* FTSE 100 sheds 3.1 pct by midday
* Commodity stocks fall on mounting recession fears
* Banks remain weak; HSBC, StanChart down
(For more on the financial turmoil, click on [])
By Dominic Lau
LONDON, Oct 15 (Reuters) - Britain's leading shares fell 3.1
percent by midday on Wednesday, ending a two-day recovery run,
as commodity stocks and banks tumbled on growing fears of a
global recession.
By 1033 GMT, the FTSE 100 <> was down 136.8 points at
4,257.4. The UK benchmark rebounded nearly 12 percent in the
previous two sessions after plummeting 21 percent last week --
its second worst weekly fall ever.
Miners were big losers, as base metal prices slipped and
after Rio Tinto <RIO.L> warned of slowing Chinese demand for
commodities because of the world financial crisis and signalled
a possible delay in plans to sell $10 billion in assets.
Rio Tinto plunged 10.9 percent, BHP Billiton <BLT.L> shed
10.4 percent, Anglo American <AAL.L> sank 14.2 percent, Xstrata
<XTA.L> slumped 16.1 percent and Eurasian Natural Resources
<ENRC.L> sagged 12.5 percent.
Weaker crude prices weighed on energy stocks, with BP
<BP.L>, Royal Dutch Shell <RDSa.L>, BG Group <BG.L> and Cairn
Energy <CNE.L> dropping between 1.7 and 5.4 percent.
"Today is one of those days that is indicating we are not at
the end of a bear market," said Angus Campbell, head of sales at
Capital Spreads.
"There are still recessionary fears. There are still fears
about the global outlook for equities. You would get big, big
rises after big, big falls but the big, big rises won't be able
to cancel out all the falls that we see for quite a while."
Banks were other standout losers, with the FTSE 350 banks
index <.FTNMX8350> down 2.4 percent. HSBC <HSBA.L>, HBOS
<HBOS.L> and Standard Chartered <STAN.L> lost between 0.4 and
8.3 percent.
But Lloyds TSB <LLOY.L> rose 6.4 percent after the
Independent said the government was considering a U-turn that
would allow the bank to pay dividends to shareholders while
still taking advantage of its 37 billion pounds bank bailout
scheme.
Barclays <BARC.L> and Royal Bank of Scotland <RBS.L> added
2.1 and 0.8 percent, respectively.
Results from U.S. bank JPMorgan <JPM.N> later in the day
will give further clues on the state of the crisis-hit sector.
Insurers languished after the Times said the Financial
Services Authority had stepped up its scrutiny of leading life
assurers amid concerns that crumbling investment markets are
putting their solvency levels under pressure.
Prudential <PRU.L>, Old Mutual <OML.L>, Aviva <AV.L>,
Friends Provident <FP.L> and Standard Life <SL.L> fell between
3.6 and 7.8 percent. Friends Provident also traded ex-dividend.
RECESSION FEARS MOUNT
British unemployment posted its biggest rise in 17 years in
the three months to August as the jobless rate rose to its
highest level in eight years. []
U.S. producer prices and retail sales data, due at 1230 GMT,
will provide a further gauge to the health of the U.S. economy.
"While we may overcome the immediate financial crisis ...
you have got the broader economy to consider. Things are not
looking so cheerful," said Tim Hughes, head of sales trading at
IG Index.
"The broader global economy is still incredibly precarious
and facing some huge challenges going forward."
Experian <EXPN.L> shed 6.7 percent after the credit checking
firm reported a 13 percent rise in first-half revenue, and said
it had decided not to sell its price comparison Web site,
Pricegrabber, as potential buyers were unlikely to be able to
finance acceptable offers in current market conditions.
British Land <BLND.L> and Smith & Nephew <SN.L> also fell
after going ex-dividend.
Autonomy <AUTN.L> climbed 3.9 percent after the software
group beat market expectations by posting adjusted pretax profit
of $53.7 million for the third quarter, and said it was
"confident" about its outlook.
(Editing by Paul Bolding)
