Britain's main index dips as M&S slumps on Ocado deal rights issue

British blue-chip stocks fell again on Wednesday as Marks & Spencer tumbled after announcing a rights issue to fund an online food joint venture with Ocado, while plans for a cash call knocked Metro Bank to an all-time low.

The main index was 0.7 percent lower by 0930 GMT while the midcap index was down 0.6 percent.

M&S slumped as much as 10 percent and was on course for its steepest one-day decline in more than two and a half years after saying it would finance the Ocado deal from a rights issue to raise up to 600 million pounds ($796.32 million) and a dividend cut.

Ocado reversed course to be slightly lower after rising 5 percent as M&S said it would pay 750 million pounds to own half of the online grocer's UK retail business.

The blue-chip bourse, which earns a major chunk of its earnings in dollars, was also dragged down by a stronger pound and tensions between India and Pakistan.

Sterling rallied in the previous sessions on growing hopes of a Brexit delay as Prime Minister Theresa May offered lawmakers the chance to vote for a no-deal or delay Britain's European Union divorce.

Midcaps saw some big fallers too, with Metro Bank tanking 19.3 percent a day after it disclosed that regulators were looking to investigate the circumstances around an accounting error at the lender.

Metro Bank also announced plans for a 350 million pounds shareholder cash call on Tuesday.

Fashion retailer Ted Baker slid 13 percent after it forecast lower earnings for the year, blaming the impact of foreign exchange rates, higher costs to upgrade its systems and inventory write-downs.

Asian markets and U.S. stock futures were also negative as investors stayed away from riskier markets after Pakistan said it had shot down two Indian jets in its territory.

"Though the moves have been positive (on hopes for a U.S.-China trade deal), investors are getting impatient over the lack of tangible progress," Spreadex analyst Connor Campbell said.

That, along with the India-Pakistan standoff and Brexit, has put the markets "in a bad mood", Campbell added.

Rio Tinto outperformed with a 2 percent rise after it announced a special dividend and reported better-than-expected earnings for the year.

On the FTSE 250, gambling software maker Playtech rose 3 percent after inking a deal with GVC to provide its services and products to GVC brands.