The London market slipped into the red as investors remained focused on the timing of the next interest rate hike by the US Federal Reserve.
UK investors got their first chance to react to Friday’s comments by Fed chair Janet Yellen, who said a rate hike “would be appropriate” in the coming months if America’s economy and jobs market showed ongoing improvements.
Sentiment was cautious following the long bank holiday weekend, with the FTSE 100 Index losing modest early session gains to stand 2.2 points lower at 6268.6.
Oil prices, which last week rose above 50 US dollars a barrel for the first time in nearly seven months, fell slightly as the production of Canadian oil resumed following recent fires, while investors were also looking ahead to Thursday’s OPEC meeting.
Brent crude fell 0.5% to 49.99 US dollars a barrel.
Among stocks, Alliance Trust surged 4% higher in the FTSE 250 Index after RIT Capital Partners confirmed talks for a potential takeover of the Scottish investment firm.
RIT – chaired by financier Jacob Rothschild – said discussions over a £5 billion merger were at a “preliminary stage”.
Alliance Trust shares lifted 18.3p to 526.8p.
Sainsbury’s was 1.6p lower at 267.7p in the top flight after the competition regulator launched an inquiry into its planned £1.4 billion takeover of Argos.
The Competition and Markets Authority (CMA) said late on Friday that it will consider comments on the tie-up and decide by July 25 whether to launch a full inquiry.
Home Retail shares slipped 0.1p to 166.6p.
Second-tier stock IG Group saw shares lift 4p to 801.5p after the spreadbetting firm reported solid trading in the fourth quarter and said earnings for the year are set to be slightly ahead of expectations.
Elsewhere, scandal-hit Volkswagen shares were 3% lower in Germany, down 4.1 euros (£3.12) to 133.9 euros (£101.88), after posting a 19.3% drop in pre-tax profits to 3.2 billion euros (£2.4 billion) for the first three months of 2016.
Chief executive Matthias Mueller insisted the group had delivered “respectable results under difficult conditions”, adding that the firm “managed to limit the economic effects of the diesel issue”.
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