* FTSE 100 index steadies in afternoon trading
* Housebuilders rally after BoE comments
* London Stock Exchange surges on index deal
* Barclays, Standard Chartered fall sharply
By Atul Prakash
LONDON, June 26 Britain's top share index was
flat on Thursday as a rally in housebuilders on Bank of England
comments was offset by a fall in banks, including Barclays after
it was hit by a lawsuit from the New York Attorney General.
The market was also underpinned by the London Stock Exchange
Group, which surged 6.3 percent after unveiling the
largest acquisition in its history. It snapped up U.S. group
Frank Russell for $2.7 billion to boost its position in the
world's largest financial services market.
Housebuilders Persimmon and Barratt Developments
rose more than 5.5 percent after Bank of England
Governor Mark Carney announced a cap on home loans and tougher
checks, but said the central bank did not aim to curb house
"Carney's comments are generally being perceived as less
stringent and more dovish than investors had expected," James
Butterfill, global equity strategist at Coutts, said.
"Measures such as direct controls to curb lending growth
were not addressed and consequently homebuilders, which had been
pricing more stringent measures, are rallying."
Gains in housebuilders were counterbalanced by a sharp
decline in shares of some major banks. The blue-chip FTSE 100
index was flat at 6,732.44 points by 1233 GMT.
Standard Chartered slipped 4 percent after issuing
a profit warning. Barclays slumped 5.5 percent after
the New York Attorney General filed a securities fraud lawsuit
against the bank on charges of giving an unfair edge to its U.S.
high-frequency trading clients.
Barclays shares have fallen around 20 percent this year,
underperforming the FTSE 100 - which is flat since the
start of 2014 - and a rise of around 1 percent in the STOXX
Europe 600 Bank Index.
"The judicial context is becoming a real drag for the
European banking sector. There are fears among investors of a
contagion effect from the U.S. investigations. After BNP
, Barclays, who will be next?," said Alexandre Baradez,
chief market analyst at IG France.
The fall in Barclays shares wiped out about 2 billion pounds
($3.3 billion) from the bank's total market capitalisation.
However, investors remained positive on the broader market's
Analysts expect the FTSE 100 to hit a record high of 7,000
points later in 2014 on expectations of a further strengthening
in the British economy, better corporate results and more
corporate takeover activity.
(Additional reporting by Sudip Kar-Gupta in London and Blaise
Robinson in Paris; Editing by Andrew Heavens and Susan Fenton)