* FTSE 100 falls 5.4 percent
* Banks knocked by uncertainty on European financial sector
* Miners, oils hit by falling crude, metals prices
(Click on [] for more on financial crisis)
By Simon Falush
LONDON, Oct 6 (Reuters) - Britain's top share index tumbled
5.4 percent by midday on Monday, with banking and mining stocks
hammered as officials across the globe scrambled to contain the
fallout from the escalating crisis in financial markets.
By 1035 GMT the FTSE 100 <> was down 275.2 points at
4,705.2 after losing 2.1 percent last week, though it recovered
slightly after briefly falling to its lowest level in nearly
four years.
No stock was in positive territory on the UK benchmark
index.
Banks were among the biggest fallers with Barclays <BARC.L>,
Royal Bank of Scotland <RBS.L> and HBOS <HBOS.L> down between
11.8 and 15.5 percent.
The UK finance minister said Britain is looking at all
options on the financial crisis and that it is prepared to take
radical action where it is needed.
The Financial Times said Alistair Darling was considering a
taxpayer-funded recapitalisation of Britain's banks, amid signs
of cross-party and central bank support for an effective
part-nationalisation of the sector.
More European governments followed Germany's lead offering
blanket deposit guarantees to savers as German authorities
clinched a deal to rescue lender Hypo Real Estate <HRXG.DE> at
the second time of asking.
"We thought the market was going to start lower after U.S.
markets ended lower (on Friday) and that's been compounded by
issues surrounding the German economy," said Neil Parker, market
strategist at RBS. "No one's certain on what's been agreed and
what hasn't so there's a lot of confusion out there."
BAILOUT BLUES
Investors were also concerned whether a $700 billion bailout
package agreed last week from the United States would be big
enough to prevent a global recession.
"The (U.S.) bailout has gone through but there are concerns
about how it's going to be implemented and with European banks
also in trouble, it's playing on investor jitters," Richard
Hunter, head of UK equities at Hargreaves Lansdown said.
Other financial stocks were also hit, with interdealer
broker ICAP <IAP.L> down 3.3 percent, hedge fund Man Group
<EMG.L> shedding 10 percent and insurers Old Mutual <OML.L> and
Prudential <PRU.L> falling 6.5 and 10.6 percent respectively.
Mining stocks were hit by falling metals prices on fears
that the financial crisis would lead to a wider economic
slowdown and shrink demand.
Kazakhmys <KAZ.L> and Eurasian Natural Resources <ENRC.L>
were the index's biggest fallers, down 19.4 and 17.1 percen,
while Xstrata <XTA.L>, BHP Billiton <BLT.L>, Rio Tinto <RIO.L>
and Anglo American <ALL.L> fell between 8.9 and 11.4 percent.
"Governments are making progress in sorting out problems in
the banking sector, but there's a growing realisation that they
are not in a position to deal with the economic slowdown that's
coming," said Graham Neale, director at stockbroker Killik & Co.
Energy companies were hit by falls of more than $3 in crude
prices <CLc1> below $91, with BP <BP.L> down 5.4 percent Royal
Dutch Shell <RDSa.L> losing 5.7 percent and Cairn Energy <CNE.L>
falling 10.8 percent.
British Airways <BAY.L>, which often benefits from lower
fuel prices, fell 9.7 percent as the market continues to be
pessimistic on the outlook for airlines following the flag
carrier's report of a 9 percent fall in September premium
traffic.
Retailers were also pressured, with the Financial Times
quoting the country's largest corporate insolvency specialist
Begbies Traynor as saying a large number of UK retailers could
go bust in the new year.
Marks & Spencer <MKS.L> fell 2.3 percent, Next <NXT.L> shed
5.7 percent and Kingfisher <KGF.L> was down 3.4 percent.
(Editing by David Cowell)
