PM Truss reverses part of tax policy

Fires finance minister and close ally Kwarteng

Pound, bond prices fall again

Investors, economists say more needed to calm markets

Truss faces own political fight to survive

By Elizabeth Piper, Kate Holton and Alistair Smout

LONDON, Oct 14 (Reuters) - British Prime Minister Liz Truss fired her finance minister Kwasi Kwarteng and scrapped parts of their unpopular economic package on Friday in a desperate bid for political survival less than 40 days into her premiership.

With financial markets in turmoil, a chastened Truss said she accepted her government's plans for unfunded tax cuts had gone "further and faster" than investors were expecting.

"I have acted decisively today because my priority is ensuring our country's economic stability," she told a brief news conference in Downing Street. "I want to be honest, this is difficult. But we will get through this storm."

The pound and British government bond prices tumbled after she spoke, with economists and investors saying her reversal of 20 billion pounds ($22 billion) of tax cuts was not yet enough to restore calm.

Britain is engulfed in a political crisis akin to the industrial battles of the 1970s, the sterling crash of the early 1990s and the chaos that followed Brexit. Since it voted to leave the European Union in 2016 it has lost three prime ministers and its reputation as a predictable member of the global economic order.

"This marks the first time in decades - since at least the 90s - that the financial markets have forced the government of a big developed economy with its own central bank to capitulate on core fiscal ambitions," analysts at consultancy Evercore said.

Earlier Truss fired her finance minister and close friend, Kwarteng, after he rushed back to London overnight from IMF meetings in Washington where Britain's chaotic recent management of its economy was a focal point.