*Sterling falls 1.6 percent, UK gilt futures hit 5-week low

*UK announces plan to enable BoE asset buying

*FTSE, UK bank shares tumble after hefty RBS losses

LONDON, Jan 19 (Reuters) - UK government bonds and the pound fell on Monday, while stocks tumbled after British Prime Minister Gordon Brown unveiled new plans to shore up banks and gave the Bank of England scope to print money if needed.

As part of the bailout plan, the government said it would increase its stake in Royal Bank of Scotland (RBS.L: Quote, Profile, Research), whose shares tumbled as much as roughly 70 percent after it announced the biggest loss in UK corporate history of up to 28 billion pounds.

Steep losses in RBS's share price dented British and the wider European share indices while concern about the proposals' multi-billion price tag drove UK gilt futures to five-week lows and helped push sterling down nearly 1.6 percent against the dollar.

"The UK banking system is in the spotlight and it isn't a pretty sight," said Nick Parsons, head of markets strategy, at nabCapital in London.

"Relative to the size of the economy, the UK bank bailout has the potential to be bigger than the U.S. one as they have not been able to put any figures on how open-ended the taxpayer liability could be. But the main problem with the plan is that it doesn't seem to fix the problem -- the demand for credit."