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London - Britain's top share index steadied in late trading 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 6.4% after unveiling the largest acquisition in its history. It snapped up US group Frank Russell for $2.7bn to boost its position in the world's largest financial services market.
Housebuilders Persimmon and Barratt Developments both rose about 5% 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 prices directly.
"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."
Gains in housebuilders were counterbalanced by a sharp decline in shares of some major banks. The blue-chip FTSE 100 index was flat at 6 735.45 points by 15:11 GMT.
Standard Chartered fell 4.7% after issuing a profit warning. Barclays slumped 6.7 percent after the New York Attorney General filed a securities fraud lawsuit against the bank on charges of giving an unfair edge to its US high-frequency trading clients.
Barclays shares have fallen around 20% 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 US 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 £2bn ($3.3bn) 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 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.
