LONDON (Reuters) - London's position as the world's top financial centre is under threat from the global downturn and fierce competition from New York and fast-growing hubs like Dubai, Singapore and Shanghai, a report said on Friday.

Facing the worst turmoil in decades, financial institutions may leave London for places offering lower taxes, more attractive regulation and other incentives such as grants, the report's authors said.

London has already lost hundreds of jobs and billions of pounds of investment to centres such as Singapore, Bermuda and Luxembourg, the report for Mayor Boris Johnson said.

"Other centres are simply more co-ordinated, more strategic and more aggressive," said Bob Wigley, chairman of Merrill Lynch for Europe, Middle East and Africa, who led the panel of executives who wrote the report.

The economic crisis will exacerbate existing worries about whether London can hold onto its leading position, he added.

The report blamed aggressive competition from other cities, more European Union regulation, unpredictable taxation, high living costs and transport bottlenecks.

It made five recommendations, including the following:

The city should establish a new body to promote its role as a financial centre.

London must restore its reputation for regulation by supporting the financial watchdog's planned new model.

Major investment is needed to improve infrastructure, including electricity and data supplies as well as roads, railways and airports.

Mayor Johnson, who commissioned the study to see how the city can retain its dominant position, said a strong financial services sector would help Britain emerge from the recession.

It would be wrong to withdraw support for the industry at a time of crisis, even though its excesses and bad decisions fuelled the global upheaval, he added.