FTSE falls 2.6% on commodities; HBOS, RBS rebound

* FTSE 100 falls 2.6 pct

* Banks, except HBOS and RBS, fall despite UK rescue package

* Heavyweight commodity stocks fall on growth concerns

(Click on [nCRISIS] for more on financial turmoil)

By Dominic Lau

LONDON, Oct 8 (Reuters) - Britain's top share index slid 2.6 percent by midday on Wednesday as recession fears stemming from a credit crisis battered commodity stocks, but Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) and HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) rebounded on news of a UK rescue plan.

By 1046 GMT, the FTSE 100 .FTSE was down 119 points at 4,486.2, after falling to 4,245.3 to touch a five-year low earlier in the session. It is down 32 percent for the year.

HBOS and RBS leapt after falling 40 percent in the previous session, supported by a government plan to inject up to 50 billion pounds ($87 billion) into the ailing banking sector.

HBOS soared nearly 52 percent, also boosted by relief that its acquisition by Lloyds TBS (LLOY.L: Quote, Profile, Research, Stock Buzz) was on course, traders said, while RBS surged 26 percent.

Under the bank rescue plan at least 200 billion pounds will be made available to UK banks under a special liquidity scheme, and banks will increase their total Tier 1 capital by 25 billion pounds.

The government will also provide an incremental minimum of 25 billion pounds of further support for all eligible institutions, in the form of preference shares, PIBS or as assistance to an ordinary equity fund-raising.

But the rest of the sector remained under pressure, with Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz), HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) and Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz) losing between 1.2 and 11.8 percent.

The FTSE 350 banks index .FTNMX8350 lost 1.9 percent.

"It's not good out there. Whatever anybody wants to think about this deal, I give it more than cautious welcome," said Howard Wheeldon, senior strategist at BGC Partners.

"It will sufficiently do the job for the UK. But the UK is only one market in isolation. In a global market environment, what the UK is doing is just one piece of the jigsaw."

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