FTSE falls as growth fears hit commodities, banks

* FTSE 100 falls 1.1 pct early

* Global recession fears weigh on commodity stocks

* Banks weak but HBOS, Lloyds and RBS rebound (For more on the financial turmoil, click on [nCRISIS])

By Dominic Lau

LONDON, Oct 15 (Reuters) - Britain's leading share index fell 1.1 percent early on Wednesday, snapping a two-day recovery and tracking weakness in the U.S. and most Asian markets as fears of a global recession intensified.

Commodity stocks led the losers on the FTSE 100 .FTSE, which was down 47.6 points at 4,346.6 at 0737 GMT. The UK benchmark rebounded nearly 12 percent in the previous two sessions after plummeting 21 percent last week -- its second worst weekly fall ever.

Miners took a beating as base metal prices slipped and after Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) warned of slowing Chinese demand for commodities because of the world financial crisis and signalled a possible delay in plans to sell $10 billion in assets.

Rio Tinto shed 5.4 percent, BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz) fell 5.9 percent, Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz) dropped 7 percent, Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) lost 7.4 percent and Eurasian Natural Resources (ENRC.L: Quote, Profile, Research, Stock Buzz) slipped 8.8 percent.

With crude prices CLc1 easing below $79 a barrel on recession and demand concerns, energy stocks languished. 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) and Tullow Oil (TLW.L: Quote, Profile, Research, Stock Buzz) were down 1.6 to 3.5 percent.

"While we may overcome the immediate financial crisis ... you have got the broader economy to consider. Things are not looking so cheerful," said Tim Hughes, head of sales trading at IG Index. "The broader global economy is still incredibly precarious and facing some huge challenges going forward."

Banks were other standout losers, with the FTSE 350 banks index .FTNMX8350 losing 2 percent. Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) and Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz) lost between 0.9 and 4.9 percent.

Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz) advanced 5.2 percent after the Independent said the government was considering a U-turn that would allow the bank to pay dividends to shareholders while still taking advantage of its 37 billion pounds bank bailout scheme.

The Financial Times also said some of Britain's banks were urging the government to lift the ban on dividend payments imposed as part of the bailout of the crisis-hit sector.

HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz), which is to be merged with Lloyds, rose 2.6 percent, while Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) added 1.4 percent.

RBS, Lloyds and HBOS "would be well-served by paying some level of (low) dividend simply to re-enter the dividend list and allow income funds to again hold banks," said Alex Potter of Colins Stewart in a note.