* FTSEurofirst 300 index falls 1.3 percent
* Deutsche Boerse, LSE merger talks lift exchange stocks
* StanChart, BHP down after disappointing updates (Adds details, updates prices)
By Danilo Masoni and Atul Prakash
MILAN/LONDON, Feb 23 (Reuters) - European shares fell Tuesday on falling oil prices and disappointing updates from Standard Chartered and BHP Billiton, but M&A expectations boosted shares in exchange operators.
Standard Chartered fell 6.7 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 in BHP Billiton dropped 6.1 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 fell 1.3 percent at 1,289.04 points after hitting a two-week high on Monday. The index extended earlier losses in the final stretch of the session as crude oil prices fell further after Saudi Oil Minister Ali Al-Naimi ruled out any production cuts.
"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 of merger talks between Deutsche Boerse and the London Stock Exchange to create a European trading powerhouse sent their shares up 3.2 and 13 percent respectively, also buoying shares in other stock exchange operators like Euronext and Spain's BME.
"We're going in the direction of further consolidation even though there is no certainty yet the merger is going to happen," Activtrades chief market analyst Carlo Alberto De Casa said.
France's Thales rose 6.3 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 3.2 percent, hit by BHP and weaker metals prices. The STOXX Europe 600 Oil and Gas index fell 3.2 percent as crude oil prices dropped 4 percent as Al-Naimi ruled out output cuts.
Today's European research round-up (Editing by Mark Heinrich)