LONDON (AFP) - Britain's markets watchdog is holding talks with "relevant parties" over allegations of foreign exchange market manipulation by banks, a spokesman said on Thursday.

"The Financial Conduct Authority is aware of these allegations and has been speaking to the relevant parties. However, we can't comment further at this time," an FCA spokesman said.

The Financial Times, citing sources, said the FCA had requested information from several banks with large London foreign exchange businesses following allegations that lenders had traded ahead of customer orders and attempted to manipulate benchmarks.

Citigroup and Deutsche Bank, the two largest players in the foreign exchange market with a combined market share of about 30 percent, are among the banks which have been asked for information on the matter.

However, there was no suggestion that the two banks were being specifically targeted, the business daily added. The FCA would not confirm any names.

The development meanwhile comes as the European Commission is shortly expected to present proposals to tighten up oversight of key financial market benchmarks, especially of interest rates, in the wake of last year's Libor interbank rate-rigging scandal.