By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- U.K.'s benchmark stock index closed near the flat line on Wednesday as solid advances for insurers were offset by a slide for Lloyds Banking Group PLC after the U.K. government reduced its stake in the lender.

The FTSE 100 index closed marginally higher at 6,605.30, after a solid 1.3% advance on Tuesday.

Topping the list of gainers in London, shares of Standard Life PLC rallied 7% after the insurance firm said it will buy Ignis Asset Management Ltd. from Phoenix Group Holdings for 390 million pounds ($642.89 million) cash.

Another insurance firm, Legal & General Group PLC gained 2.5% after the company announced a GBP3 billion bulk annuity contract with the former chemical company ICI's pension fund. Insurance firms came under heavy selling pressure last week when U.K. finance minister George Osborne outlined plans to scrap a rule that requires pension funds to be used to buy annuities, potentially denting future profits for insurers.

Also in the sector on Wednesday, RSA Insurance Group PLC climbed 3.9% and Aviva PLC added 1.8%.

Elsewhere in London, electricity company SSE PLC advanced 1.3% after saying it plans to sell assets and reduce debt in an effort to raise about GBP1 billion.

On a downbeat note, shares of Lloyds Banking Group (LYG) fell 4.9% to 75 pence after the U.K. government said it has sold a 7.8% stake in the part state-owned bank at 75.5 pence a share. The government now owns about 25% of the company.

Mining firms also added pressure in London, tracking metals prices lower. Shares of BHP Billiton PLC (BHP) lost 0.7% and Anglo American PLC dropped 0.6%.

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