Britain's top share index closed lower on Monday hurt by banks, on renewed jitters over the eurozone sovereign debt crisis, and miners dented by weaker metals prices and concerns over the impact of floods in Australia. But Smith & Nephew, Europe's largest maker of replacement knees and hips, jumped to the top of the blue chip leaderboard, up 9.5 percent, on a report it received a bid last month from Johnson & Johnson, which was not disclosed.
The FTSE 100 index ended down 28.03 points, or 0.5 percent, at 5,956.30, extending its losing streak to a third straight session, though it remained up 1 percent in 2011. Banks fell on worries about European debt, with the spotlight on Portugal. The European Central Bank threw Portugal a temporary lifeline on Monday by buying up its bonds, traders said, as market and peer pressure mounted for Lisbon to seek an international bailout.
Barclays bucked the weak sector trend, up 0.6 percent, boosted by a UBS upgrade to "buy". The FTSE 100 index is down "on the back of concerns over Europe. OK, we've had a bit of M&A as well with Smith & Nephew, but it hasn't been enough to push it into positive territory," Manoj Ladwa, senior trader at ETX Capital, said. "The one thing that could turn things around going into tomorrow are fourth-quarter earnings from Alcoa." Alcoa is set to post its quarterly results after the US market closes, unofficially launching the Q4 earnings season.
Smith & Nephew's US rival Johnson & Johnson made a 7 billion pound ($10.9 billion) take-over approach that the British group rejected as inadequate, Sky News said at the weekend, without citing sources. Panmure Gordon raised its rating on S&N to "buy". Miners tracked metals prices lower as European debt concerns curbed risk appetite, and with flash floods in Australia, which have damaged Queensland state's $20 billion coking coal export industry, also hurting the sector.
"Many of the issues which were weighing on the market at the end of last year are still there - the debt issues are still in place within the euro zone - and I also think one of the things which is worrying markets a bit is inflation," Peter Dixon, economist at Commerzbank, said. "With commodity price inflation being one of the key problems, I suspect what's happening is there's concern that input prices are going to be rising faster than output prices, with the result that margins won't look quite so healthy." Oil major BP dropped 1.3 percent after the Trans Alaska Pipeline, of which it is one of the owners, was shut for a third day on Monday.
Elsewhere, Capital Shopping Centres fell 3.9 percent as investors feared US company Simon Property Group would abandon its pursuit of the firm. Oil explorer Tullow Oil rose 1.4 percent after bullish updates for two of its wells in Ghana and Mauritania. Also on the upside, British testing firm Intertek rose 5.6 percent, helped by an upbeat note from Credit Suisse.
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