Charges have been dropped against five persons arrested for allegedly looting downtown Washington business places during disturbances that broke out Nov. 27 in a demonstration against the Ku Klux Klan.

Federal prosecutors said yesterday that charges were dropped because of insufficient evidence, but that testimony bearing on the allegations is expected to be presented to a grand jury. At least 23 businesses suffered damage during the two-hour disturbance. Most of them are located near McPherson Square at 15th and K streets NW.

Police arrested more than 30 persons after hundreds of participants hurled rocks and bottles at police and store windows after they had been denied a chance to confront the Klan.

Eighteen persons were to be prosecuted, 16 of them on felony charges and two for misdemeanors. But five of the 16 felony cases were dropped.

Authorities pointed out that it is frequently difficult for police who make an arrest in a crowd later to attribute specific acts to a specific defendant.

For instance, five persons were charged with second-degree burglary in the alleged looting of Melart Jewelers at 601 13th St. NW. According to store manager Robert Getz, approximately $6,000 worth of rings and pendants were stolen. Charges growing out of that incident against two men--Russell Allen, 19, and and Carlton Thomas, 21--were dropped Dec. 16, according to court records.

On Dec. 17, a second-degree burglary charge against Tyrone W. Cosby, 21, was dropped. Cosby had been charged with intent to steal a bicycle after he and several other persons were seen breaking the display window at the Big Wheel Bikes shop at 1004 Vermont Ave. NW, according to court records.

Larry Howard, 39, was arrested and charged with second-degree burglary in connection with the break-in at Big Wheel Bikes. Charges against him were dropped Dec. 13, according to court records.

Tyrone M. Holiday, 29, was charged with second-degree burglary in connection with a break-in at the French Design Tailor Shop. Records show the charge was dropped Dec. 17.