FTSE falls sharply as Fed holds rates on economy concerns

* FTSE 100 down 1.5 pct, commodities top fallers

* Glencore (Xetra: A1JAGV - news) down on equity placing concerns

* Gold (Other OTC: GDCWF - news) miners up as weaker dollar boost metal price

By Atul Prakash

LONDON, Sept 18 (Reuters) - Britain's top share index fell sharply on Friday, led lower by commodities stocks, after the U.S (Other OTC: UBGXF - news) . Federal Reserve left interest rates unchanged on concerns about the health of the global economy.

Recent financial market volatility and disappointing inflation data contributed to the Fed's decision to hold rates steady, but the committee maintained its bias towards a rate hike sometime this year, while lowering its long-term outlook for the economy.

"Markets have increasingly become worried about the sustainability of global growth and the Federal Reserve's reluctance to raise interest rates fuels those concerns," Robert Parkes, equity strategist at HSBC, said.

"The Fed's assessment of the global economic conditions has made investors nervous as uncertainty about the timing of a U.S. rate hike continues. We think that a rate hike could still be announced in December."

The blue-chip FTSE 100 index fell 1.5 percent to 6,094.07 points by 1409 GMT. The benchmark index is down about 7 percent so far this year.

"Markets have taken cues from the U.S., but uncertainty prevails and choppiness is the only certain result. Deflation is a concern. China is a concern, and oil prices look set to take another leg lower," Brenda Kelly, head analyst at London Capital (LSE: LCG.L - news) Group, said.

Energy and mining shares were among the top decliners in the FTSE 100 index as prices of both crude oil and copper fell more than 2 percent on concerns about global growth. The UK oil and gas index fell 3.4 percent, while miners were down 3 percent.

Shares (Berlin: DI6.BE - news) in Royal Dutch Shell (Xetra: R6C1.DE - news) , BP, Anglo American and BG Group (LSE: BG.L - news) dropped 2.8 to 3.7 percent.

Commodities trader and miner Glencore led the fallers, down 6.6 percent and trading near a record low after trade bodies raised questions about its recent $2.5 billion equity placing.

On the positive side, some precious metal mining companies surged on expectations that the Fed's move to hold U.S. interest rates would keep the dollar under pressure and lift gold prices.

Shares in miners Randgold Resources and Fresnillo (Amsterdam: FN6.AS - news) rose 4.0 percent and 3.4 percent respectively.

In the mid-caps, healthcare services provider UDG Healthcare (LSE: UDG.L - news) surged 7 percent after McKesson Corporation (NYSE: MCK - news) agreed to buy its pharmaceutical distribution division. (Additional reporting by Kit Rees; Editing by Janet Lawrence and Angus MacSwan)