Britain's top share index flat

Britain's top share index ended flat on Thursday as gloom in banks on worries over possible write-downs and tough market conditions offset lustre in mining shares after BHP Billiton approached Rio Tinto. The FTSE 100 closed down 3.2 points or 0.05 percent at 6,381.9 to hit its lowest closing level in eight weeks.
Earlier, the UK benchmark index fell as much as 1.5 percent as part of a global decline on intensified credit worries. But the announcements that BHP, the world's biggest miner, had made an approach to Rio in a bid to create a global mining behemoth rescued the sector from earlier steep losses and lent support to the index. Rio, the world's second-biggest mining group, rejected the offer.
"It would be a very different day without the Rio Tinto-Billiton story. Rio alone has added more than 35 points to the FTSE 100, and the Rio-Billiton story has buoyed the entire mining sector," said Tim Hughes, head of sales trading at IG Index. "But putting it aside, we are gripped by the ongoing credit crunch which is now starting to spill over into genuine concerns about the prospect for corporate earnings."
Rio leapt nearly 22 percent, but BHP fell 5.7 percent. All other miners rose. The banking sector was the main weight on the index, with Barclays and Royal Bank of Scotland falling more than 5 percent to hit new multi-year lows as investor fretted about possible write-downs and the impact on revenues from tough financial market conditions.
Analysts have turned more negative on the two UK banks this week after US banks Citigroup and Merrill Lynch warned of major write downs related to US mortgage problems and other exposures, and late on Wednesday Morgan Stanley said it could take a $3.7 billion hit.
Shares in Lloyds TSB, Standard Chartered and HSBC fell between 2.6 and 3.7 percent. On the economic front, the Bank of England held interest rates at a six-year high of 5.75 percent for the fourth month running, but expectations of a cut soon are growing as trouble in the financial sector drags on. US Federal Reserve Chairman Ben Bernanke said in testimony before Congress that the economy faced risks on both the growth and inflation fronts.
Gas producer BG Group jumped nearly 10 percent after its partner in a Brazilian oil field said the field had recoverable reserves of up to 8 billion barrels, making it the biggest find in Brazil. Mitchells & Butlers rose 3.3 percent as traders speculated that former Manchestered United investors John Magnier and JP McManus were looking to raise the 3.36 percent stake in the firm held by their Elpida vehicle.
The speculation helped lift the pub sector, with Britain's biggest pubs firm, Punch Taverns, up 2.8 percent. Punch also said it remained confident about hitting 2008 profit forecasts despite the smoking ban and waning consumer confidence, which are prompting drinkers to stay at home.
BT Group slipped 4.2 percent with the market disappointed at the lower-than-expected earnings and margins. Also on the downside, Invesco dipped 4.9 percent after the fund management firm said its third-quarter pretax profit rose 75 percent on a year ago but revenue from performance fees fell.