Lloyds CEO says alert to M&A

LONDON (Reuters) - Lloyds TSB (LLOY.L) is keeping an eye on acquisition opportunities after a fall in bank sector valuations in the last year but said it will be "very, very prudent" about any deal.

"You've seen prices adjust virtually across the board in the last year and we would be remiss if we didn't look and see what was going on in the wider environment beyond our core businesses," said Lloyds CEO Eric Daniels. "But we're in absolutely no hurry. We'll look, but we'll be very, very prudent."

Daniels told reporters on a conference call following first-half results that there is a chance of a UK recession but a slowdown is more likely.

He said the bank's base case is for UK economic growth of 1.6-1.8 percent this year and 1.3 percent next year.

House prices are likely to fall 10-15 percent this year and another 5 percent next year, he said.

(Reporting by Steve Slater)