European shares weighed down by StanChart, BHP; exchange operators rise

* FTSEurofirst 300 index falls 0.5 percent

* Deutsche Boerse (Xetra: 63DA.DE - news) , LSE merger talks lift exchange stocks

* StanChart (HKSE: 2888-OL.HK - news) , BHP down after disappointing updates (Adds details, updates share prices)

By Danilo Masoni and Atul Prakash

MILAN/LONDON, Feb 23 (Reuters) - European shares retreated on Tuesday on lower oil prices and disappointing updates from Standard Chartered (BSE: 580001.BO - news) and BHP Billiton (NYSE: BBL - news) , but M&A expectations boosted shares in exchange operators.

Standard Chartered fell 4.4 percent after the emerging markets-focused bank reported an 84 percent fall in profits, hammered by weaker global financial markets, tumbling commodity prices and rising loan impairments.

Shares (Berlin: DI6.BE - news) in BHP Billiton dropped 4.3 percent after the miner slashed its interim dividend by 75 percent, abandoning a long-held policy of steady or higher payouts, and reporting its first net loss in more than 16 years.

The pan-European FTSEurofirst 300 index was down 0.5 percent by 1424 GMT after hitting a two-week high on Monday.

"Following the recent relief rally from oversold levels we expect equity markets to remain range-bound ahead of next month's ECB, Fed and BoJ policy meetings, which could prove to be the next big catalyst for 2016," said Emanuele Rigamonti, Analyst at JCI Capital in London.

News (Other OTC: NWSAL - news) that Deutsche Boerse and the London Stock Exchange "are in merger talks" sent their stock prices up 7 and 17 percent respectively, also buoying shares in other stock exchange operators like Euronext (Lisbon: ENX.LS - news) and Spain's BME.

In spite of the losses in StanChart shares, the STOXX Europe 600 bank index was flat, as some Italian banks rose and market players including Credit Suisse (LSE: 0QP5.L - news) said the recent sell-off was overdone.

"Italian banks' valuations reached distressed levels in early February...which did not reflect accurately the underlying health of the Italian banking sector," Rigamonti said.

France's Thales rose 7.6 percent as the company raised its dividend after posting higher-than-expected core profit and record orders in 2015.

The STOXX Europe 600 Basic Resources index was the biggest sectoral decliner, down 1.9 percent, hit by BHP and weaker metals prices. The STOXX Europe 600 Oil and Gas index fell 0.8 percent as crude oil prices dropped more than 1 percent amid worries over rising Iranian output.

Today's European research round-up (Additional reporting by Danilo Masoni in Milan; Editing by Mark Heinrich)