The FTSE 100 gave up early gains on Monday as declines in gold miners and AstraZeneca, plus weak construction figures, dampened early enthusiasm.
The FTSE 100 closed down 27.26 points, or 0.3%, at 10,651.77.
The FTSE 250 closed down 34.58 points, or 0.2%, at 23,504.22, while the Aim All-Share rose 2.65 points, or 0.3%, to 778.74.
Data showed the UK construction sector remained in deep contraction during June, although the pace of decline eased slightly from May's six-year low.
The S&P Global UK Construction Purchasing Managers' Index rose to 38.4 in June from 38.2 in May, remaining well below the 50-point threshold that separates growth from contraction.
Construction activity has declined every month since January 2025, with June marking the second steepest decline since the start of the pandemic.
Housing construction recorded its biggest drop of the year, while civil engineering activity fell to its weakest level since April 2020.
Rob Wood, chief economist at Pantheon Macroeconomics in the UK, said there are few signs of a “Burnham boost” in the PMI mood, despite the incoming prime minister's apparent emphasis on investment spending.
“We estimate that the general activity index is consistent with a drop in construction sector production of around 3.0% in three months, the same signal as in May,” Wood added.
In European stock markets on Monday, the Cac 40 in Paris closed down 0.3%, while the Dax 40 rose 0.2% in Frankfurt.
In New York, the Dow Jones Industrial Average was down 0.1%, the S&P 500 was up 0.7% and the Nasdaq Composite was up 1.2%.
U.S. financial markets were closed on Friday for the Independence Day public holiday.
The U.S. services sector continued to expand in June and price pressures remained elevated, although they eased month-over-month, two reports on Monday showed.
The S&P Global US overall services PMI business activity index rose to 51.2 in June, down from a previous preliminary reading of 51.3 but up from 50.7 in May.
Although it hit a four-month high, the figure was below the FXStreet consensus, which had forecast a larger improvement to 51.4.
The recovery was supported by a faster rise in new business, which grew at its strongest pace since February, as companies responded to the gradual stabilization of economic conditions.
Meanwhile, a separate report from the Institute for Supply Management also showed that the US services sector expanded in June.
The ISM Services PMI registered 54.0 in June, the 24th consecutive month in expansion territory, in line with the FXStreet consensus but below May's figure of 54.5.
“The report shows that demand for services continues to expand, hiring improves and cost pressures gradually ease – a combination that the Fed is likely to view as consistent with patience rather than a clear green light to act,” analysts at TD Economics said.
The euro traded lower against the dollar, standing at $1.1417 on Monday compared to $1.1440 on Friday.
Against the yen, the dollar was trading at 162.34 yen, down from 161.30 yen on Friday.
The pound was trading at $1.3354 on Monday afternoon, down from $1.3351 on Friday.
Against the euro, sterling strengthened to 1.1696 euros from 1.1672 euros on Friday.
The 10-year US Treasury yield traded at 4.49% on Monday, up from 4.46% on Thursday, and the 30-year US Treasury yield widened to 5.00% from 4.97% on Thursday.
Brent crude oil for September delivery traded higher on Monday at $72.13 a barrel, up from $71.76 on Friday.
Gold was trading at $4,148.94 an ounce on Monday, down from $4,167.57 on Friday.
In London, a 2.5% drop in the second most valuable company in the United Kingdom, the pharmaceutical company AstraZeneca, weighed.
Its sector counterpart, GSK, also weakened, with a fall of 1.6%.
The weak gold price affected Fresnillo, with a drop of 2.4%, and Endeavor Mining, with a drop of 2.5%.
On the FTSE 250, easyJet soared 9.3% as it said it had reached an agreement in principle for a takeover by US private equity firm Castlelake following a new proposal valuing the company at more than £5bn.
The Luton-based budget airline said Castlelake's fifth proposal was for 690 pence per share, which they were “willing to recommend” to shareholders, provided a firm offer was made before August 3, the deadline set for the deal.
JPMorgan analyst Harry Gowers said the offer price is close to or largely in line with recent investor comments that around 700 pence a share is the level at which shareholders could seriously commit to Castlelake.
Gowers said the key questions now surrounding the deal are: will the proposed ownership and control structure satisfy easyJet's board and regulators? Will a counterbidder emerge? And, if a firm offer materializes, will the majority of shareholders vote in favor of the deal?
ITV fell 0.1% after saying it will return £950 million to shareholders after agreeing to sell its Media and Entertainment business to Sky, a wholly owned subsidiary of Comcast, for up to £1.6 billion.
Through the deal, the London-based television broadcaster and content producer will receive £1.2 billion in cash, Sky's Love Productions business valued at £200 million and up to £200 million in cash, payable in the second half of 2028 and linked to 2027 advertising performance.
Dan Coatsworth, head of markets at AJ Bell, said a “reduced ITV would be an attractive acquisition target for someone like Netflix looking to acquire production facilities and a rich library of content.”
“Likewise, ITV could be an acquirer and enter into ancillary deals,” he added.
The biggest risers on the FTSE 100 were Relx, up 59.0p to 2,393.0p, St James's Place, up 29.0p to 1,332.0p. 1,892.0p.
The biggest fallers on the FTSE 100 were Compass Group down 1.14p to 31.57p, Associated British Foods down 58.5p to 1,898.5p, Coca-Cola HBC down 145.0p to 5,025.0p, Halma down 108.0p to 3,906.0 pence and Metlen Energy & Metals, which was down 1.1 pence. at 41.64p.
Tuesday's global economic calendar includes trade figures in the US and Canada, house price data in Halifax in the UK and industrial production figures in Germany.
Tuesday's local corporate calendar includes a trading report from oil major Shell and third-quarter results from polymer producer Victrex.
– Contributed by Alliance News
