The London Stock Exchange building is seen in central London
The London Stock Exchange building is seen in central London September 24, 2009. REUTERS

Shares in British banks were down on the FTSE 100 in morning trading, helping to drag the index down after a positive start caused by some merger activity in the mining sector sparked some optimism.

This morning it emerged that Vedanta Resources is intending to buy a majority stake of 51-60 per cent in Cairn India for $8.5 million to $9.6 billion. The move is motivated by hopes that Chinese demand for metals is likely to grow.

The news sent the FTSE 100 up, by 09:00 the share index had risen by 0.2 per cent to 5,284.27, lead mainly by miners.

Insurance company Aviva also helped boost the FTSE 100 after it confirmed this weekend that it had rejected a takeover offer of £5.0 billion for its general insurance business in Britain, Ireland and Canada.

Banking shares however continued to decline.

By 10:05 shares in Lloyds Banking Group were down 1.12 per cent to 69.45 pence per share, RBS shares declined 1.70 per cent to 46.17 pence per share, Barclays shares fell 0.68 per cent to 314.85 pence per share and HSBC shares dropped 0.11 per cent to 652.20 pence per share.

Overall the FTSE 100 was down 0.65 per cent to 5,241.29.

Barclays HSBC FTSE India