* FTSE 100 down 1.2 pct
* HSS hire plummets after price target cuts
* Betfair gains on merger talk
By Liisa Tuhkanen
LONDON, Aug 26 (Reuters) - Britain's top share index fell onWednesday, tracking declines in European and Asian markets asworries over China's economy continued to weigh on equitiesaround the world.
The blue chip FTSE 100 index was down 1.2 percent by0823 GMT, with all but two individual companies in the red andbroadly in line with European peers.
The index posted its biggest one-day rise since 2011 onTuesday after China cut interest rates to calm markets.
The relief didn't last, as investors quickly resumed theirfocus on the deteriorating outlook for China and its impact onthe global economy. ID:nL4N11067X]
"On the face of it yesterday's actions by the People's Bankof China should have acted as the palliative that equity marketswere looking for, and for a while it seemed to work quite well,"Michael Hewson, analyst at CMC Markets, said in a note.
"And yet there was always the nagging doubt that it was amere attempt at window dressing to assuage a sulky market."
The broad sell-off in UK-based shares was lead by miners,with FTSE 350 mining index down 1.6 percent.
Glencore was one of the top fallers, shedding 2.3 percentafter South Africa's Eskom said it wantscompensation from Glencore's mining subsidiary Optimum if it isunable to supply coal to Eskom's Hendrina power plant.
BHP Billiton fell 1.1 percent as rating agenciessaid that its investment-grade credit ratings might come underpressure in the current financial year.
Among smaller companies, HSS Hire plummeted 35.7percent after the tool and equipment hire company said itexpected earnings below market expectations and as Numis and JPMorgan cut their price target for the stock.
"A second profit warning within six months of the IPO hasreduced our confidence that HSS can deliver growth ratessignificantly ahead of the market," Numis said in a note.
On the upside, shares in mid cap Betfair soared 21percent after the online gambling company and Irish rival PaddyPower said they had reached an agreement in principleon a possible merger, marking the latest in a string of possibletie-ups across the sector. (Reporting by Liisa Tuhkanen; Editing by Dominic Evans)
Hss Hire (HSS)
