LONDON: Britain's top equity index fell on Tuesday, as slumps in banking group Standard Chartered and miner BHP Billiton offset a surge in London Stock Exchange Group on merger talks.
LSE stock soared 13.7 percent, its biggest daily gain since November 2008, after confirming it was in talks to potentially merge with Deutsche Boerse.
The blue-chip FTSE 100 index closed down 1.3 percent at 5,962.31 points, retreating from the previous session's 1.5 percent rise.
Standard Chartered was the biggest declining FTSE 100 stock in percentage terms, dropping 6.7 percent after the emerging-markets focused bank posted an 84 percent fall in annual profits.
Standard Chartered blamed tumbling commodity prices, 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 engineer GKN sent its shares down 6.5 percent, after it reported a broadly flat annual profit.
BHP Billiton also fell 6.1 percent after the company slashed its interim dividend by 75 percent, 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 shares of BP and Royal Dutch Shell after Iran's oil minister dubbed a proposal to coordinate a production freeze as "laughable" and Saudi Oil Minister Ali Al-Naimi ruled out any production cuts.
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 4.5 percent in 2016 and down around 16 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, rising 2.8 percent and 2.1 percent respectively.
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