CORRECTED-Melrose, L&G lead FTSE lower as calm returns to markets
(Corrects day in first paragraph to Wednesday from Tuesday)
* FTSE 100 down 0.2 pct
* Index steadies after Ukraine-fuelled swings
* Melrose, L&G among top fallers after updates
* Standard Chartered, Admiral support index
By Francesco Canepa
LONDON, March 5 (Reuters) - Disappointing updates from companies including engineering buyout firm Melrose Industries and life and pensions group Legal & General dragged Britain's top shares down on Wednesday.
A sense of guarded calm returned to the market ahead of talks between the United States and Russia on easing tensions over Ukraine, allowing investors to focus on fundamentals, such as company earnings, valuations and the economic outlook.
Shares in Melrose fell 4.9 percent as the company, which follows a private equity type model in the engineering sector of buy, improve and sell, cautioned on challenging market conditions this year and said sales growth in 2014 would not be easy to achieve.
The comments, which included a cautious note on currency effects, triggered some profit taking on the stock, which had risen nearly 20 percent since early December.
"We cut our profit forecasts and ... valuation by 3-4 percent, for the impact of Sterling's recent strength on the translated results," analysts at Investec write in a note. "After robust share price performance, we move from buy to add."
Legal & General, a provider of life insurance and pensions, was also a major faller, down 2.1 percent, with analysts flagging a small miss in operational profit.
The two stocks were among top fallers on the FTSE 100, which was down 12.2 points, or 0.2 percent, at 6,811.57 points at 0902 GMT.
The FTSE was also weighed down by five stocks, including miners BHP Billiton and Rio Tinto, going ex-dividend. They took between 7.71 points and 8.46 points off the index, according to Reuters calculations.
Supporting the FTSE were Asia-focused bank Standard Chartered and insurer Admiral Group after their updates.
The UK blue-chip index had risen 1.7 percent on Tuesday, more than recouping its losses in the previous session, after Russia said the use of force in neighbouring Ukraine was not needed for now.
"We're taking a bit of profit but I think we're going to get some steady action during the course of the day (on) dissipating worries of imminent military action in Ukraine," Manoj Ladwa, head of trading at TJM Partners, said.
Yet still-mixed corporate earnings and the prospect of tighter monetary policy from the Bank of England meant many traders expected the FTSE to make little headway in the coming months.
FTSE 100 is seeing technical resistance at 6,835, a level that has capped the index over the past week, and above that at 6,860, a level tested several times over the past year and last seen in 1999.
"I don't think it's going to be able to break that resistance until we see some incremental positivity coming out from the Bank of England," TJM's Ladwa said. (Editing by Louise Ireland)