Britain's FTSE falls, although LSE soars on merger talks

LONDON: Britain's top equity index fell on Tuesday as a slump in major bank Standard Chartered and miner BHP Billiton pushed back the market, although shares in the London Stock Exchange surged on merger news.

London Stock Exchange Group soared 16.6 percent, set for its biggest daily gain since November 2008, after confirming that it was in talks to potentially merge with Deutsche Boerse.

The potential union would be structured as an all-share merger of equals under a new holding company.

The blue-chip FTSE 100 index was down 0.4 percent at 6,015.59 points at 1405 GMT, retreating from a 1.5 percent rise a day earlier.

Standard Chartered was among the worst-performing FTSE 100 stocks in percentage terms, dropping 3.2 percent after the emerging-markets focused bank posted an 84 percent fall in annual profits.

Standard Chartered blamed tumbling commodity prices, which have been hit by a slowdown at top commodities consumer China, and rising loan impairments for its weak earnings.

"It's a horrendous headline number out on StanChart. I'd still be a seller of any rallies on the stock because I am concerned about their exposure to China," said Beaufort Securities' sales trader Basil Petrides.

An underwhelming set of results for British engineering company GKN sent its shares to the bottom of the FTSE 100 index, down 4 percent, after it reported a broadly flat annual profit.

BHP Billiton also fell 3.9 percent after the company slashed its interim dividend by 75 percent on Tuesday, abandoning a long-held policy of steady or higher payouts as it braces for a longer-than-expected commodities downturn.

Miners were further hit by weaker metals prices, while lower oil prices pushed down the shares of BP and Royal Dutch Shell, with oil falling on worries that rising Iranian output would deepen a global crude oversupply.

Concerns about a weakening global economy have affected oil and metals prices since the start of 2016 and hit world stock markets, with the FTSE down 3.6 percent in 2016 and down 15.5 percent from a record high reached in April 2015.

"Although European and American equities may continue to enjoy short term gains, the factors which have left global stocks heavily depressed remain intact," said FXTM research analyst Lukman Otunuga.

However, robust results boosted housebuilder Persimmon and subprime lender Provident Financial, a newcomer to the index, which rose 4.9 percent and 2.8 percent respectively.