LONDON - Embattled British mortgage lender HBOS PLC has confirmed that it is in advanced talks about being taken over Lloyds TSB PLC.

The brief Wednesday announcement gives no details and added that the talks may not lead to an agreement.

HBOS is the parent company of Halifax and the Bank of Scotland. It has come under pressure because of its exposure to the U.S. subprime mortgage market, raising questions about whether it can refinance its debt. The bank says it can borrow money whenever it needs to.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

LONDON (AP) — HBOS PLC and Lloyds TSB PLC were in advanced talks about a merger, the British Broadcasting Corp. reported Wednesday as HBOS shares again came under heavy selling pressure in the market.

Neither company would comment on what they called "market speculation."

BBC business editor Robert Peston said that the talks were "very advanced" and could be wrapped up this week.

The report dragged HBOS and Lloyds shares into positive territory, reversing earlier losses. At one point, HBOS shares were down as much as 47 percent from Tuesday's close of 182 pence ($3.26), but then rose to more than 10 percent higher. HBOS shares closed at 730.5 pence on Jan. 2.

Lloyds shares traded in a narrower range, veering from 10 percent down from Tuesday's close of 279.75 pence ($5.01) to 10 percent higher. Lloyds shares started the year at 469 pence.

HBOS, parent company of Halifax and the Bank of Scotland, has come under pressure because of its exposure to the U.S. subprime mortgage market, raising questions about whether it can refinance its debt of more than 100 million pounds ($180 million) in coming months. The company insists that it has no problems raising money.

The Financial Services Authority, Britain's financial regulator, weighed in Wednesday with assurances that HBOS was secure.

"Since the beginning of the current extreme difficulties in the financial markets, the Financial Services Authority has worked intensively with all major UK banks to ensure they have credible capital and liquidity plans," the agency said. "We are satisfied that HBOS is a well-capitalized bank that continues to fund its business in a satisfactory way."

Both Lloyds, the fifth-largest U.K. bank by market capitalization, and HBOS have seen their earnings fall from the impact of the subprime mortgage crisis in the United States.

HBOS reported a 56 percent drop in first-half net profit, down from 2.1 billion pounds ($3.8 billion) in the first half of 2007 to 931 million pounds ($1.67 billion) this year.

Lloyds TSB reported a 63 percent drop in first-half net profit to 576 million pounds ($1.03 billion). Lloyds TSB is the UK's third biggest home mortgage lender.

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