Variable iron-line emission near the black hole of Markarian 766

Aims. We investigate the link between ionised Fe X-ray line emission and continuum emission in a bright nearby AGN, Mrk 766. Methods. A new long (433 ks) XMM-Newton observation is analysed, together with archival data from 2000 and 2001. The contribution from ionised line emission is measured and its time variations on short (5-20 ks) timescales are correlated with the continuum emission. Results. The ionised line flux is found to be highly variable and to be strongly correlated with the continuum flux, demonstrating an origin for the ionised line emission that is co-located with the continuum emission. Most likely the emission is ionised reflection from the accretion disc within a few A. U. of the central black hole, and its detection marks the first time that such an origin has been identified other than by fitting to spectral line profiles. Future observations may be able to measure a time lag and hence achieve reverberation mapping of AGN at X-ray energies.