FTSE falls 1.8% early on US plan uncertainty, WaMu

* FTSE 100 falls 1.8 pct on U.S. bailout uncertainty, WaMu

* Financials top-weighted losers

* Commodity stocks down on weaker metal and crude prices

By Dominic Lau

LONDON, Sept 26 (Reuters) - The UK's top share index fell 1.8 percent early on Friday, led by financials, as the fate of a $700 billion U.S. rescue plan remained uncertain and after U.S. authorities closed Washington Mutual in the country's biggest bank failure.

By 0726 GMT, the FTSE 100 .FTSE was down 92 points at 5,105.0, after rallying 2 percent on Thursday on hopes that the bailout package would be approved by U.S. lawmakers soon. The UK benchmark has fallen nearly 21 percent so far this year.

Talks on the rescue for the U.S. financial system fell into chaos amid accusations that Republican presidential candidate John McCain scuppered the deal.

Adding to the gloom, Washington Mutual (WM.N: Quote, Profile, Research, Stock Buzz), 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: Quote, Profile, Research, Stock Buzz) for $1.9 billion.

"We are not too concerned about failure to announce the package overnight. We think this is natural politics playing its hand in the run-up to the presidential elections," said Graham Secker, UK equity strategist at Morgan Stanley.

"We would expect some positive results from the discussions within the next few days. Obviously the market is very sensitive about what's going on at the moment."

But in a bid to ease market concerns, central banks across the world scrambled to meet a desparate demand for cash, both in their own currencies and the U.S. dollar. [ID:nSP346519]

Banks were the top-weighted losers on the FTSE 100, with the FTSE 350 banks index shedding 2.2 percent.

HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz), Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz), Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz), HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) and Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz) were down between 0.9 and 4.3 percent.

Mid-cap Bradford & Bingley (BB.L: Quote, Profile, Research, Stock Buzz) sank 14 percent.

Insurers also suffered, with Aviva (AV.L: Quote, Profile, Research, Stock Buzz) shedding 2.3 percent, Old Mutual (OML.L: Quote, Profile, Research, Stock Buzz) falling 5.6 percent and Prudential (PRU.L: Quote, Profile, Research, Stock Buzz) losing 2.1 percent.

Hedge fund group Man Group (EMG.L: Quote, Profile, Research, Stock Buzz) dropped 3.4 percent.

London Stock Exchange (LSE.L: Quote, Profile, Research, Stock Buzz) sagged 4.1 percent. The bourse 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.

Energy stocks fell along with weaker crude prices CLc1. BP (BP.L: Quote, Profile, Research, Stock Buzz), Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz), BG Group (BG.L: Quote, Profile, Research, Stock Buzz), Cairn Energy (CNE.L: Quote, Profile, Research, Stock Buzz) and Tullow Oil (TLW.L: Quote, Profile, Research, Stock Buzz) fell 1.3 to 3.3 percent.

Miners also took a beating, with BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz), Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz), Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz), Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz), Vedanta Resources (VED.L: Quote, Profile, Research, Stock Buzz), Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz) and Eurasian Natural Resources (ENRC.L: Quote, Profile, Research, Stock Buzz) losing 2 to 7.6 percent.

With the financial turmoil intensifying, retailers also took a hit. Marks & Spencer (MKS.L: Quote, Profile, Research, Stock Buzz) dropped 1.8 percent, Next (NXT.L: Quote, Profile, Research, Stock Buzz) sagged 3 percent, Kingfisher (KGF.L: Quote, Profile, Research, Stock Buzz) lost 2.9 percent and Tesco (TSCO.L: Quote, Profile, Research, Stock Buzz) slipped 0.6 percent. (Editing by David Cowell)