(Reuters) - Britain's FTSE 100 rose as Lloyds gained after promising to return cash to shareholders and optimism prevailed around the China-U.S. trade talks, while Sainsbury's slumped after regulators objected to its takeover of Walmart's Asda.
The FTSE 100 was up 0.1 percent and the FTSE 250 up 0.2 percent by 0951 GMT. A decline in shopping centre owner Intu limited gains on the mid-cap index.
Sainsbury's fell more than 14 percent after Britain's competition regulator said its deal with Walmart-owned Asda should either be blocked entirely or require the sale of a significant number of stores and possibly one of the brands.
Shares in Sainsbury's were on track for their worst day since October 2008 and had given up all the gains accumulated since the deal was announced in April 2018.
Rival Morrisons tumbled 4.4 percent as well.
"Sainsbury's is the squeezed middle, losing market share to discounters and simultaneously losing out to more premium brands. The worry is it has no credible plan except this merger", said Neil Wilson, analyst at Markets.com.
Intu Properties dropped 8.4 percent after it scrapped its dividend, under pressure from several retail bankruptcies. Shares of rival Hammerson fell 4 percent.
Glencore rose 1.4 percent after announcing a $2 billion share buyback and an 8 percent rise in full-year adjusted core earnings.
Lloyds Banking Group shares rose 2.8 percent and were among the biggest gainers. Britain's biggest mortgage lender raised its dividend and announced a share buyback, despite weaker-than-expected annual profit growth.
"The slight rise in impairment provisions in Q4 is a worry given the slowdown seen in the UK economy in the last six months, which may suggest management concern that some consumers may be at the limit of their budgets," said CMC Markets analyst Michael Hewson.
Miners , which hit an 8-month high, and financials boosted the main index. Investors were also betting on a breakthrough in the U.S.-China trade talks, as U.S. President Donald Trump said he was open to extending their March 1 deadline.
The domestically-focussed mid-cap index was buoyed by industrials and consumer stocks ahead of Prime Minister Theresa May's latest trip to Brussels as she hopes to find a way forward for her contentious divorce deal on exiting the European Union.
Among small-caps, McBride lost almost a third of its value after the cleaning products maker forecast full-year adjusted pretax profit to be about 10-15 percent lower than last year.
Flybe soared 92 percent after saying it had received an alternative financing proposal from a new consortium, challenging a Richard Branson-backed group that agreed to buy out the regional airline.
Sainsbury's overtakes FTSE since Asda deal announcement: https://tmsnrt.rs/2BIpPyu
(Reporting by Shashwat Awasthi and Muvija M in Bengaluru; editing by Gareth Jones)