By Shashwat Awasthi and Yadarisa Shabong
(Reuters) - Financial stocks and housebuilders slipped after British Prime Minister Theresa May asked the European Union to delay Brexit and caused the FTSE 100 to snap a seven-day winning streak, while a slide in sterling pulled the mid-cap index lower.
However, satellite operator Inmarsat was a bright spot as it surged on a $3.3 billion takeover approach.
The FTSE 100 ended 0.5 percent lower and the FTSE 250 gave up 0.8 percent. Ireland's main index, often considered a barometer of Brexit jitters, fell 0.6 percent.
Sterling fell sharply after May asked the EU to delay Brexit until June 30, but a European Commission document seen by Reuters said the delay should either be several weeks shorter, to avoid a clash with European elections in May, or extend at least until the end of the year.
"That the EU would then have to unanimously approve the request – something that isn't a guarantee – is a further complication for the pound to grapple with," said Spreadex analyst Connor Campbell.
An index of banks skidded 0.6 percent and an index of housebuilders endured their worst day in more than three weeks to be the biggest drags on the blue-chip index. Blue-chip homebuilder stocks gave up between 3-4 percent.
"As long as the issue of a possible extension remains inconclusive, bank shares should continue to erode the up-rating investors accorded them," said CityIndex analyst Ken Odeluga.
The Brexit update added to woes inflicted by miners, which had slipped as iron ore prices plunged in anticipation of increased supply after Vale SA prepared to restart work at its largest iron ore mine.
Home improvement retailer Kingfisher shed 6.4 percent on its worst day in nearly a year after it reported lower full-year results and said it had started the process to find a replacement for its chief executive officer.
Investors also awaited the U.S. Federal Reserve's policy decision, in which it is expected to hold interest rates steady, shave the number of hikes projected for the rest of the year, and detail a plan to end the monthly reduction of its balance sheet.
Mid-cap satellite operator Inmarsat jumped 13.1 percent on its best day since June 2018 after it confirmed takeover talks with a consortium of investors that could take the company private for about $3.3 billion.
Automotive fluid storage company TI Fluid Systems scaled up 12.1 percent, its biggest one-day gain on record, as strong orders boosted annual revenue.
But Keir Group tumbled 11.3 percent after its half-year underlying earnings fell and the builder slashed its interim dividend.
(Reporting by Shashwat Awasthi and Yadarisa Shabong in Bengaluru; Editing by Gareth Jones)