FTSE 100 drops 2.5 pct on Glencore, metals price fears

* Mining index touches lowest level since December 2008

* Glencore (Xetra: A1JAGV - news) posts biggest one-day drop as debt fears grow

* Vodafone falls after Liberty Global (NasdaqGS: LBTYA - news) talks end (Updates prices at close)

By Kit Rees and Lionel Laurent

LONDON, Sept 28 (Reuters) - Britain's leading share index fell on Monday as fears grew over mining group Glencore's ability to withstand a metals price slump and as Vodafone's European tie-up talks with Liberty Global ended.

The FTSE 100 index was down 2.5 percent, at 5,958.86 points at its close, a touch lower than European indexes. The UK market is relatively exposed to mining and commodities stocks, which have fallen sharply as emerging market growth slows.

Glencore slumped 29 percent - its biggest one-day drop - to an all-time low after a Investec (LSE: INVP.L - news) raised doubts over the mining and commodities company's valuation and high debt levels.

"If major commodity prices remain at current levels, our analysis implies that, in the absence of substantial restructuring, nearly all the equity value of both Glencore and Anglo American (LSE: AAL.L - news) could evaporate," Investec analysts wrote.

Anglo American shares fell 10.1 percent.

The FTSE 350 mining index was down 9 percent at its lowest since December 2008. Rio Tinto (LSE: RIO.L - news) , BHP Billiton (NYSE: BBL - news) and Antofagasta (Other OTC: ANFGF - news) all fell more than 4.5 percent.

"One cannot deny the fact that investors are - if the (Glencore) share price is telling you anything - extremely concerned about the near-term outlook," Charles Stanley (LSE: CAY.L - news) market analyst, Jeremy Batstone-Carr, said.

The outlook for China's economy was also a drag, with forecasts pointing to a likely shrinking of its factory sector for the second month in a row. Profits earned by Chinese industrial companies declined at the sharpest rate in four years in August, according to official data.

"It (Other OTC: ITGL - news) may be too soon to believe a bottom is in (for commodity prices)," London Capital Group analyst, Brenda Kelly, said.

On the deal-making front, Vodafone was hit by news that tie-up talks between the network operator and Liberty Global had collapsed. Vodafone shares were down 4.8 percent, their lowest level in 10 months.

Among standout gainers, brewer SABMiller (Xetra: BRW1.DE - news) touched six-month highs, rising 1.3 percent after a report in the Sunday Times that Anheuser-Busch might bid about $106 billion for the company.

"News (Other OTC: NWSAL - news) of the proposed takeover of SABMiller (Amsterdam: MI8.AS - news) ... has put M&A firmly in the spotlight," HSBC strategists wrote in a note to clients. "We believe (companies) will increasingly choose to buy (rivals) because the macro is so uncertain." (Editing by Louise Ireland)