Financial crisis shaves over 5 percent off FTSE

* FTSE 100 falls 5.4 percent

* Banks knocked by uncertainty on European financial sector

* Miners, oils hit by falling crude, metals prices

(Click on [ID:nL6259237] 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 .FTSE 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: Quote, Profile, Research, Stock Buzz), Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) and HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) 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: Quote, Profile, Research, Stock Buzz) 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