* FTSE 100 falls 1.9 pct on U.S. bailout uncertainty, WaMu
* Energy, miners down on weaker metal and crude prices
* Banks hit by bailout uncertainty
By Simon Falush
LONDON, Sept 26 (Reuters) - The UK's top share index fell 1.9 percent by
midday on Friday as uncertainty on a $700 billion U.S. rescue plan dented
sentiment on the global economy, sending banks and commodity stocks lower.
Adding to the gloom, Washington Mutual <WM.N>, the largest U.S. savings and
loan, was closed by the U.S. government and its banking assets were sold to
JPMorgan Chase & Co <JPM.N> for $1.9 billion, further weighing on already
heavily sold financials stocks.
By 1054 GMT, the FTSE 100 <> was down 99 points at 5,097.9, erasing
nearly all gains made the previous session on hopes that the bailout package
would be approved by U.S. lawmakers soon.
The UK benchmark has fallen 21 percent so far this year and 9.5 percent in
September, on track for its biggest fall in over 5 years.
Talks on the rescue for the U.S. financial system degenerated into chaos
amid accusations that Republican presidential candidate John McCain scuppered
the deal.
"There's a high degree of caution on the fact that the rescue plan has hit a
rock," said Jeremy Batstone-Carr, head of private client research at Charles
Stanley.
"Risk aversion is once again to the fore, There's a low degree of visibility
generally. In that environment you can't blame people for scurrying into
relatively low risk assets like government bonds irrespective of the prices and
yields you are getting."
Banks were hit hard by the ongoing uncertainty and nervousness was
exacerbated by Dutch-Belgian bank Fortis <FOR.BR> <FOR.AS> saying it was looking
to sell more non-core assets than anticipated. []
The FTSE 350 banks index <.FTNMX8350> shed 2.3 percent.
HSBC <HSBA.L>, Barclays <BARC.L>, Royal Bank of Scotland <RBS.L>, Lloyds TSB
<LLOY.L>, HBOS <HBOS.L> and Standard Chartered <STAN.L> were down between 1 and
7 percent.
Mid-cap Bradford & Bingley <BB.L> sank 10.6 percent as a cost-cutting
programme unveiled on Thursday failed to dispel concerns over its funding
position.
Insurers also suffered, with Aviva <AV.L> shedding 3.3 percent and
Prudential <PRU.L> losing 4.8 percent. Old Mutual <OML.L> fell 7.6 percent,
making it the biggest faller in the FTSE 100.
London Stock Exchange <LSE.L> sagged 4.4 percent. The exchange said volatile
markets boosted trading volumes in the first five months of its financial year,
but also led to a steep drop in initial public offerings.
Risk aversion led the dollar to slide around 1 percent against the low
yielding yen <JPY=>, which is seen as a safe haven.
In a bid to ease market concerns, central banks across the world scrambled
to meet a desperate demand for cash, both in their own currencies and the U.S.
dollar. []
WEAKER COMMODITIES
Energy stocks were the top-weighted loser in the FTSE 100 as uncertainty
about the bailout package hit demand, causing crude to fall around $3 to $105
per barrel <CLc1>.
BP <BP.L>, Royal Dutch Shell <RDSa.L>, BG Group <BG.L>, Cairn Energy <CNE.L>
and Tullow Oil <TLW.L> fell 1.9 to 5.3 percent.
Miners were also deep in the red as metals prices slid on fears that a
global slowdown would hit demand.
BHP Billiton <BLT.L>, Rio Tinto <RIO.L>, Anglo American <AAL.L>, Xstrata
<XTA.L>, Vedanta Resources <VED.L>, Kazakhmys <KAZ.L> and Eurasian Natural
Resources <ENRC.L> lost 2.9 to 6 percent.
With the financial turmoil intensifying, retailers also took a hit. Marks &
Spencer <MKS.L> dropped 2.1 percent, Next <NXT.L> slid 4 percent and Kingfisher
<KGF.L> lost 3.5 percent.
Adding to a sense that the UK economy is suffering as a result of the
13-month old credit crisis, UK Land Registry figures showed house prices falling
4.6 percent on the year, their biggest falls since the series began.
Housebuilders Taylor Wimpey <TW.L>, Barratt Developments <BDEV.L>, Persimmon
<PSN.L> and Bovis Homes <BVS.L> were down between 5 and 9.7 percent.
(Editing by Paul Bolding)
