FTSE 100 falls on Shell, Fed disappointment; banks rise

By Muvija M and Shashwat Awasthi

(Reuters) - London's FTSE 100 fell on Thursday as Shell plunged after a profit miss and the U.S. Fed dampened hopes of big interest rate cuts, with gains for two of Britain's biggest banks easing some of the pain.

Shares in London Stock Exchange Group jumped 5.9% after it announced its $27 billion merger with financial information firm Refinitiv, in which Reuters News parent Thomson Reuters holds a 45% stake.

The FTSE 100 index <.FTSE> dipped 0.2% by 0819 GMT, set for its third straight session of losses. The midcap index <.FTMC> was largely unchanged with results-driven jumps in medical products maker Convatec <CTEC.L> and outsourcer Capita <CPI.L> supporting the index.

Shell <RDSa.L>, the most valued company on the FTSE 100, fell 4.3% as its second-quarter profit slumped to a 30-month low due to lower oil and natural gas prices and refining margins. At session lows, the company was set to lose over 10 billion pounds in market capitalisation.

Standard Chartered <STAN.L> jumped 3.2% as investors focussed on strong results despite a warning on risks from the U.S.-China trade war. RSA Insurance <RSA.L> gained 3% after results, while Barclays <BARC.L> added 2.5% after hiking its dividend.

(For a graphic on 'LSE', click https://tmsnrt.rs/2ys1mv5)

Stock markets around the world tumbled following remarks from the Federal Reserve that Wednesday's 25-basis-point easing was not the start of a lengthy campaign to shore up the economy against risks such as global weakness.

"The fact is that the tension between slowing business conditions and a very buoyant level of consumption, particularly in the services sectors, is complicating the Fed's outlook," said Rick Rieder, BlackRock's chief investment officer of Global Fixed Income.

Still, the exporter-heavy FTSE 100 is on course to post its biggest annual rise since 2016, drawing strength from a slump in the pound over no-deal Brexit fears.

Among other results-driven moves, Rio Tinto <RIO.L> gave up 3% after announcing capital returns that Jefferies analysts called "underwhelming". Packaging company Mondi <MNDI.L> slumped 6.2% as it warned that economic uncertainties continued to impact trading environment.

On the midcap index, ConvaTec and outsourcer Capita stood out with gains of 14% each. ConvaTec reported an improvement in revenue trends in the second quarter, while Capita said it was on track to meet its turnaround targets.

Defying the warnings on Brexit impact from most sectors, Capita said the country's exit from the European Union could present new opportunities for private sector contractors in the longer term.

(Reporting by Muvija M and Shashwat Awasthi in Bengaluru; Editing by Saumyadeb Chakrabarty)