By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- U.K. stocks clung close to the flatline Thursday, as property developers jumped but Barclays PLC hit a 19-month low amid U.S. legal problems.

U.K.'s FTSE 100 index ended up less than 2 points at 6,735.12, but swung between gains and losses during the session.

Housing stocks ranked among the session's best performers after the Bank of England outlined measures aimed at cooling the U.K.'s housing boom. Housing stocks this week had come under pressure ahead of the bank's announcement, but on Thursday, Persimmon PLC was pushed up 5% and Barratt Developments PLC climbed 4.8%.

The central bank's Financial Policy Committee said in its report that debt levels for households haven't yet posed a risk to the stability of the financial system, but that it wants to take steps to head off potential risks.

"The implication is that the market is not out of control," said Toby Nangle, head of multi-asset allocation at Threadneedle Investments in London, in a telephone interview. "By phrasing the macroprudential controls in the way that they have, for many people who've been long housing stocks and long sterling, it's given a bit of cause for relief," he said.

Sterling (GBPUSD) rose above the $1.70 level against the U.S. dollar in the wake of the housing proposals.

House prices in the U.K. have risen nearly 10% in the year to April, according to the Office for National Statistics.

Among other property developers, British Land Co. rose 1.4%. Off the benchmark, Taylor Wimpey PLC gained 5.2% and Berkeley Group Holdings PLC rose 3.2%.

The day's best price performance came from a 6.2% rise in London Stock Exchange Group shares after the exchange operator said it's buying Frank Russell Co., a U.S.-based stock-index and asset-management business, for $2.7 billion. The stock-index unit of Russell is behind the Russell 2000 (RUT) gauge of small-cap stocks.

Barclays shares (BCS) put in the worst performance on the index, falling 6.5% to GBP2.15 ($3.66) to trade at levels not seen since November 2012, according to FactSet data. The decline was set off after New York Attorney General Eric Schneiderman on Wednesday said he's filing a civil lawsuit over how the bank operates its dark pool. Dark pools, private trading platforms that allow for block trades, are designed to allow firms to make anonymous trades without disclosing their hands.

The lawsuit alleges Barclays dramatically increased the market share of its dark pool through a series of false statements to clients and investors about how, and for whose benefit, Barclays operates its dark pool.

Litigation costs "are a challenge to Barclays executing its strategic plan, as they put pressure on the capital base, which based on our estimates pro forma for litigation, is the weakest of the peer group," said Credit Suisse in a note Thursday.

Credit Suisse estimates banking-sector litigation costs of $104 billion, up from its $58 billion estimate the year before, "and we see upward risk to this estimate. We have seen banks with legacy litigation risk starting to materially underperform those less exposed."

Elsewhere in the banking sector, Standard Chartered PLC fell 4.3% after warning its first half operating profit will be 20% lower than a year earlier. Trading conditions mainly in financial markets have been "difficult," the bank said in a statement.

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