* Barclays and Standard Chartered fall sharply
* Housebuilders rally after BoE comments
* London Stock Exchange surges on index deal
By Atul Prakash
LONDON, June 26 Britain's top share index ended
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 6.1 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
both rose about 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
"The expectation was that the BoE would be more draconian in
the policy measures announced today," Ian Richards, global head
of equities strategy at Exane BNP Paribas, said.
"There is nothing here that takes banks beyond where they
already are in terms of their underwriting criteria. That's a
huge relief for the real estate-sensitive stocks."
The market showed some choppy moves earlier in the session,
with the blue-chip FTSE 100 index falling about 0.5
percent after St. Louis Fed President James Bullard reiterated
his belief that raising rates by the end of the first quarter of
2015 will be appropriate.
The FTSE 100 ended flat at 6,735.12 points, as gains in
housebuilders were counterbalanced by a sharp decline in shares
of some major banks.
Standard Chartered fell 4.3 percent after issuing a
profit warning. Barclays slumped 6.5 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 - flat since the start of
2014 - and a rise of around 1 percent in the STOXX Europe 600
"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 more than 2 billion pounds
($3.3 billion) from the bank's market capitalisation. However,
investors remained positive on the broader market's outlook.
Analysts expect the FTSE 100 to hit a record high later in
2014 on expectations of a further strengthening of the British
economy, better corporate results and more corporate takeover
A Reuters poll of 61 traders, fund managers and strategists
gave a median end-2014 target of 7,000 points for the benchmark
FTSE 100 index - up around 4 percent from current levels - and
7,200 points by the middle of 2015.
(Additional reporting by Sudip Kar-Gupta in London and Blaise
Robinson in Paris; Editing by Andrew Roche)