By Guy Faulconbridge and Andrew Osborn LONDON (Reuters) - Where a maze of derelict warehouses and old cranes once testified to Britain's decline, glass skyscrapers teeming with traders now dominate London's docks, a metaphor - for good and ill - for Margaret Thatcher's free-market revolution.

Lloyd's of London, the insurance market, said Wednesday that it returned to profit last year, brushing off massive claims for damage caused by Superstorm Sandy. Lloyd's said it posted a pre-tax profit of £2.77 billion ($4.18 billion, 3.28 billion euros) in 2012 after a loss of £516 million in 2011 -- which it added was the costliest year on record for natural disasters. "The Lloyd's market has posted a strong result, despite incurring £10 billion of total net claims in 2012, including Superstorm Sandy," Lloyd's chief executive Richard Ward said in an earnings statement.

The London Stock Exchange Group on Thursday said it had agreed a revised takeover bid of LCH.Clearnet, wrapping up its long pursuit of the British clearing house. LSEG, which operates the London Stock Exchange and Italy's Borsa, said it would acquire up to a further 55.5 percent in LCH.Clearnet, adding to its current 2.3 percent interest. LSEG would meanwhile offer 15 euros ($19.55) a share, down from an original offer of 20 euros that had been agreed a year ago.

* LCH FY underlying op profit down 13 pct to 92.8 mln euros * Operating costs up 8 percent to 298.7 million * LSE takeover deal "making great progress" -LCH chief * LSE shares drop 5 pct, backtrack from 4-year high By Laura Noonan and Simon Jessop LONDON, Feb 15 (Reuters) - Shares in the London Stock Exchange (LSE) fell sharply on Friday as weak underlying earnings from its takeover target LCH Clearnet raised fresh concerns over the deal.