By Kit Rees
LONDON (Reuters) - The UK's top share index nudged lower on Wednesday, weighed down by declines among commodity-related stocks, though well-received results from M&S and deal chatter among British banks kept trading lively.
The blue chip FTSE 100 (FTSE) index was down 0.7 percent at 7,823.71 points by 0912 GMT, edging down from the previous session's record high.
Deal-making talk among banks spurred shares in Standard Chartered (L:STAN) 1.5 percent higher, the second-biggest FTSE gainer, following a media report that peer Barclays (L:BARC) was sounding out possible mergers with rival banks.
Shares in Barclays reversed their slight gains from earlier to trade 0.6 percent lower. Sources told Reuters that Barclays has no plans for a tie-up with rival banks.
"If Barclays has genuinely been looking into this ... it makes sense for it to do it as a protective measure given that it is facing activist demands and we've seen them prove quite successful elsewhere," Mike van Dulken, head of research at Accendo Markets, said.
"But it would be a huge undertaking."
M&A has been a prominent theme among UK stocks this year as the pound remains at subdued levels, with recent moves being CYBG's (L:CYBGC) takeover bid for Virgin Money (L:VM), Takeda's acquisition of Shire (L:SHP) and Sainsbury's (L:SBRY) deal with Asda.
Marks & Spencer (L:MKS) was the biggest gainer, up 3.5 percent after the retailer gave a full-year update.
While it reported a second straight decline in annual profit and saw like-for-like clothing and home sales fall in the fourth quarter, investors were positive that the retailer had kept its outlook and not cut its dividend. Marks & Spencer is undertaking a programme of store closures to help revitalise the business.
Ameet Patel, senior analyst for Northern Trust Capital Markets, said that M&S' results were solid and highlighted the confident tone in the company's outlook commentary.
"There remains a considerable short base in (M&S) for the all the ‘obvious’ reasons to sell UK retail, which brings with it the potential for squeezes on lack of bad news or even shades of positive news," added Patel.
However, falls among heavyweight miners and oil stocks, in particular, dragged the FTSE lower. Energy stocks took around 30 points off the index as shares in Royal Dutch Shell (L:RDSa) fell 2.4 percent and BP (L:BP) declined 2 percent as oil prices retreated on the possibility of higher OPEC output weighing on the market. [O/R]
A rise in Brent Crude (LCOc1) to $80 per barrel this year has been a big help for both oil majors, with BP up more than 10 percent and Royal Dutch Shell up 7.3 percent year to date.
Elsewhere British mid caps (FTMC), which have also traded at record highs, retreated 0.4 percent. Shares in IT infrastructure and service provider Softcat (L:SCTS) and Britvic (L:BVIC) were notable performers, up 7.7 percent and 6.5 percent respectively.
Softcat rose after a trading update saying that market conditions and customer demand have both remained robust in the third quarter, while higher demand for healthy drinks boosted Britvic's half-year revenue.