London - Britain's top shares fell on Monday as new sanctions against Russia took their toll on energy stocks, while miners were knocked by weak economic data out of top metals consumer China.
Brightening the otherwise gloomy market, hit too by concerns about the Scottish referendum and the prospect of a tightening in US monetary policy, were signs of deal activity.
Dutch brewer Heineken said on Sunday it was approached by larger rival SABMiller about a potential takeover, but that its controlling shareholder intended to keep the company independent.
SABMiller jumped 5.1 percent, topping the FTSE 100 leader board, while peer Diageo was the second-top riser, 1.9 percent firmer, as traders bet on sector-wide merger & acquisition activity.
“There's obviously going to be further consolidation in there ... I think the whole of the beverage sector will be a good bet,” Joe Rundle, head of trading at ETX Capital, said.
In the midcaps, mainframe computer specialist Micro Focus International jumped almost 11 percent after agreeing an all-share merger with rival The Attachmate Group Inc in a deal valuing the groups' combined capital and debt at $2.35 billion (R26 billion).
Tour operator TUI Travel and majority owner TUI AG , meanwhile, agreed the terms of a merger creating the world's largest leisure and tourism group with a combined value of 6.5 billion euros.
TUI Travel rose 1.9 percent.
But the broader FTSE 100 was down 4.51 points, or 0.1 percent, at 6,802.45 points by 10:19 SA time.
Energy stocks were the biggest fallers by some margin, down 0.7 percent.
On Friday, the United States imposed sanctions on Gazprom, Gazprom Neft, Lukoil, Surgutneftegas and Rosneft, banning Western firms from supporting their activities in exploration or production from deep water, Arctic offshore or shale projects.
Projects now in jeopardy include a landmark drilling programme by US giant Exxon Mobil in the Russian Arctic that started in August as part of a joint venture with the Kremlin's oil champion Rosneft.
Now this and dozens of other projects agreed with Royal Dutch Shell among others will have to be put on hold.
BP, which owns 20 percent of Rosneft, Russia's largest oil producer, fell 1.1 percent, while Shell dropped 0.4 percent.
A batch of weak data out of China, which raised the spectre of a sharp slowdown there, pressured the miners, off 0.2 percent.
Data out on Saturday showed China's factory output grew at the weakest pace in nearly six years in August, while growth in other key sectors also cooled.
The market was on tenterhooks just days out from the September 18 referendum on independence for Scotland, with polls showing the “Yes” and “No” camps running close. Investors were reluctant to place big bets, for now.
“Not much upside in the FTSE until after the Scottish referendum, so I would stay on the sidelines,” Lex van Dam, a hedge fund manager at Hampstead Capital, said.
The prospect of the US Federal Reserve's policy meeting later this week also made investors cautious.
The market will focus on the central bank's words, seeking clues on the timing of the first US rate hike in more than eight years. - Reuters