UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Admiral, Direct Line warn of reduced profit on rate-calculation change

U.K. stocks edged higher Monday, but the London benchmark's gain was capped as shares of London Stock Exchange Group PLC dropped by the most in two months on growing worries that its plans for a merger will collapse.

The FTSE 100 was up 0.1% at 7,251.44, but came off session highs as utility, financial and health care shares flipped lower. The index on Friday fell 0.4% (http://www.marketwatch.com/story/ftse-100-loses-ground-as-rbs-leads-banks-lower-2017-02-24) and closed last week's trading down by 0.8%. That broke the benchmark's three-week run of wins.

Among the worst performing shares on the index Monday were those of the London Stock Exchange (LSE.LN) as they fell 2.3%, marking the biggest decline since mid-December.

The LSE said late Sunday it wouldn't sell its majority-owned fixed-income trading platform in Italy (http://www.marketwatch.com/story/merger-between-london-stock-exchange-deutsche-borse-in-doubt-2017-02-26) to offset antitrust concerns its plan to merge with Deutsche Börse AG (DB1.XE) . The LSE says the Italian asset is a major source of revenue and profit.

Steered by sterling: The FTSE 100 had been higher earlier Monday on the back of a falling pound following a Sunday Times report (http://www.thetimes.co.uk/edition/scotland/sturgeon-and-may-head-for-indyref2-standoff-6bnqstx8h) that U.K. Prime Minister Theresa May is preparing for Scotland's First Minister Nicola Sturgeon to call for a second independence referendum in the wake of the U.K.'s Brexit vote.

A weaker pound can help boost profit and revenue made overseas by multinational companies listed on the FTSE 100.

The pound fell as low as $1.2384 Monday compared with $1.2460 late Friday in New York.

Scotland in 2014 voted to remain a part of the U.K., but a second referendum would still represent a "real and substantial risk," to the pound, said Ranko Berich, head of market analysis at Monex Europe.

But sterling did come off intraday lows, buying $1.2421, with Berich noting investors are looking ahead to U.S. President Donald Trump's speech on Tuesday before Congress in Washington. Investors want more details about his plans for fiscal policy in the world's largest economy.

See:The pound faces risk from possible 2nd Scottish referendum (http://www.marketwatch.com/story/pound-pushed-lower-as-scottish-referendum-worries-emerge-2017-02-27)

Also read:Here's how analysts say you should trade Trump's speech to Congress (http://www.marketwatch.com/story/heres-how-analysts-say-you-should-trade-trumps-speech-to-congress-2017-02-24)

Movers: Direct Line Insurance Group (DLG.LN) tumbled 6.5% after the auto insurer said a change in the discount rate used by U.K. courts to calculate personal injury damages awards (http://www.marketwatch.com/story/admiral-warns-of-profit-drop-on-uk-rate-change-2017-02-27) would cut its pretax profit between GBP215 million ($266.6 million) and GBP230 million.

Admiral Group PLC (ADM.LN) said the calculation change would reduce its 2016 reported profit by 70 million pounds ($87 million) to GBP100 million. Admiral's shares fell 2.6%.

Bunzl PLC (BZLFY) gained 2.4%, topping the FTSE 100 after the supplier of disposable products reported a gain in full-year pretax profit (http://www.marketwatch.com/story/bunzl-profit-boosted-by-ma-lifts-fy-dividend-2017-02-27).

AB Foods shares (ABF.LN) were up 0.2% but have been yanked between gains and losses during the session. The food, ingredients and retail group projected that sales at its Primark chain for the first half would be 21% ahead of last year at actual exchange rates. (http://www.marketwatch.com/story/ab-foods-projects-rise-in-sales-at-primark-2017-02-27)

(END) Dow Jones Newswires

February 27, 2017 10:35 ET (15:35 GMT)

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