LONDON: British shares were mixed on Monday as weak results from Reckitt Benckiser underlined the murky growth outlook for big consumer goods makers.
Banks extended last week's gains on the back of rising bond yields. A sustained recovery in lending rates from historic lows would boost their profits -- the US 10-year Treasuries yield rose to a four-year high last week.
The UK's top share index was little changed at 7,296 points at 1000 GMT, with Reckitt and other consumer staples makers the biggest drag on the FTSE, offset by gains in banks and in energy producers after oil prices hit their highest in nearly three weeks.
Activity was relatively muted due to market holidays in China and the United States.
Reckitt fell the most, down 5.7 percent. The maker of Durex condoms and its peers Unilever and Nestle have all disappointed with their quarterly results updates, hit by signs that they are struggling to maintain the pace of top-line growth.
Some investors say prices of their branded goods now look unsustainably high compared to the "private labels" of big retailers.
European consumer staple stocks have fared worse only than telecoms over the past six months as those concerns combined with a rise in bond yields that could eventually dim the appeal of their stable dividends.
UK shares last week recovered part of the declines suffered in a sharp sell-off earlier in the month that was driven by rising bond yields.
Many investors took the declines as an opportunity to buy shares in big UK-based multinational companies as the global growth picture still appears strong.
JPMorgan strategists advised investors a week ago to add to their global equity holdings and reiterated the view on Monday.
"We still believe that the correlation between bond and equity prices remains firmly inverse, i.e. that equities will tolerate higher yields," they said in a note.
"This is consistent with equities bouncing last week despite bond yields making clear new highs. Financials remain an OW (overweight) in that scenario and Defensives an UW (underweight)."
Convenience retailer McColls tumbled 5.6 percent after it said supply disruption caused by the collapse of wholesaler Palmer & Harvey had dented its sales.
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