The UK's leading share index drifted 0.4 percent lower on Monday, buckling under concerns over the outlook for inflation, but as ICI surged after rejecting an approach from Dutch group Akzo Nobel NV. Bucking the trend in a sliding market, ICI soared more than 15 percent, leading the index after rejecting a 7.2 billion pounds ($14.2 billion) take-over proposal from chemicals group Akzo Nobel.
The maker of Dulux paints, said the 600 pence-per-share proposal undervalued the company. Some analysts said the purchase price could rise to as high as 750 pence, or 13 times EBITDA (earnings before interest, tax, depreciation and amortisation), given the scarcity value of ICI's assets and the possibility of a bidding war.
The FTSE 100 ended down 28.9 points, or 0.43 percent, at 6,703.5, having earlier touched its highest point since September 2000 and after a stellar rally at the end of the last week.
"It's understandable the market's a little bit nervous. We had a very good finish to last week," said Henk Potts, strategist at Barclays Stockbrokers. "Inevitably, you're going to see a little bit of a pull-back when you get towards the topping levels that we've been seeing recently."
In a week of sparse significant corporate or economic data, traders said investors were cautious ahead of the Bank of England's meeting minutes on Wednesday, which could dampen spirits if they suggest another rate hike in August. Inflationary fears bruised banks, with HSBC down 0.4 percent and Royal Bank of Scotland sliding 0.5 percent, while Barclays also fell.
Oil stocks also slipped after gaining ground in the last session, with heavyweight BP off 0.9 percent and BG Group down 1.2 percent. Vodafone shares dipped 0.7 percent after media reported it will introduce a flat rate mobile broadband Internet tariff of 25 pounds a month, almost half the previous cost.
Traders added that the mobile phone giant may also be looking to buy additional assets. Pearson lost 1.3 percent after media reports said it may challenge News Corp's $5 billion bid for Dow Jones & Co, with a plan that could let Dow Jones's controlling Bancroft family keep an interest in the company.
Housebuilder Barratt Developments dipped 2.7 percent after it replaced specialist lender Bradford & Bingley in the British benchmark's quarterly rejig. Rolls Royce added 1 percent and hit an all-time high after European aircraft manufacturer Airbus landed $17 billion in orders from Qatar Airways, including confirmation of a previously announced order for 80 new Airbus A350 XWB models.