* M&G to waive 30% of annual charge during suspension
* Other property funds say they are still open
* Financial Conduct Authority working closely with M&G (Adds L&G to funds saying they are still open)
By Noor Zainab Hussain, Carolyn Cohn and Sinead Cruise
LONDON, Dec 4 (Reuters) - British fund manager M&G Investments suspended dealing in its flagship UK property fund on Wednesday, blaming Brexit uncertainty and weakness in the retail sector for a surge in investor requests to cash out.
The suspension comes hot on the heels of the high-profile meltdown of investment veteran Neil Woodford's equity income fund and applies further pressure on regulators to increase investor protections on open-ended funds.
Britain's Financial Conduct Authority (FCA) opened an investigation into the June suspension of Woodford's now-closed equity fund and last month said asset managers have "a central duty" to ensure effective liquidity management of their funds.
Fund managers offering funds that allow investors to withdraw money at will can run into problems when assets cannot be sold fast enough to cover exit requests.
Seven property funds with 18 billion pounds ($23.1 billion)under management froze after the June 2016 Brexit referendum, while Woodford's flagship fund was locked for four months before it closed in October.
Unusually high and sustained outflows from the 2.5 billion pound ($3.2 billion) M&G Property Portfolio have coincided with a period of continued Brexit-related political uncertainty, M&G Investments said, adding that it had applied a temporary suspension in dealing to protect the fund's customers.
The fund manager also said that structural shifts in Britain's retail sector had made it difficult to sell some of its largest assets. The fund has about 40% of its assets in commercial retail property.
The fund will continue to be actively managed in suspension, M&G said, adding that it would waive 30% of its annual charge until dealing resumes.
The temporary suspension will allow time to raise cash levels to pay redemptions while ensuring that asset sales are achieved at market prices and investors in the fund are safeguarded, M&G said.
Britain's top property investment funds shed almost 10% of their combined assets in the first eight months of this year as investors fret about the impact of Britain's exit from the European Union.
M&G Property Portfolio, which Morningstar data shows is Britain's second-biggest commercial property fund behind Legal & General's UK fund, suffered the biggest net outflows in the year to Oct. 31 at 1 billion pounds.
Amid concerns that the M&G suspension could trigger a stampede across the sector, Reuters sought details on the liquidity positions of several large asset managers running open-ended real estate funds.
Royal London Asset Management did not immediately respond to a request for comment.
Kames said its fund remains open. Aberdeen Standard Investments, Aviva Investors, BMO, Columbia Threadneedle Janus Henderson and Legal & General said their funds were open and had high levels of cash.
The FCA said it is working closely with M&G, the fund's authorised corporate director and the fund's depositary "to ensure that timely actions are undertaken in the best interests of all the fund's investors". ($1 = 0.7794 pounds) (Reporting by Noor Zainab Hussain in Bengaluru, Carolyn Cohn and Sinead Cruise in London Additional reporting by Huw Jones Editing by Shounak Dasgupta and David Goodman)