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Invensys has long been mooted as potential break-up candidate. Ulf Henriksson, Invensys chief executive, appeared to sugest as much last November when he said that China Southern Rail could acquire or take a stake in the business, although the company later downplayed his comments.
3.10pm: ITV falls back amid X Factor rumours
ITV came under pressure as the afternoon wore on amid reports that Simon Cowell and Cheryl Cole may not appear in the 2011 series of the channel's hit show, The X Factor.
There has been speculation that the pair would not be able to sit on the judging panel of this year's series as it clashes with the US version of the show in both are tipped to take part.
As investors fretted about the impact of the potential departure of two of the show's biggest names, ITV fell 2.1 to 84.25p.
However, analysts at UBS were quick to reassure anxious investors. In a note asking Cowell and Cole; will they won't they?, analysts suggested that putting together a different panel would be better than delaying the screening in order to have the same panel.
"The X Factor auditions are imminent and the show starts in August; either ITV go ahead and show it or delay screening until January 2012 in order to have the same panel. We argue that it is likely ITV continues the screening as planned with a slightly different panel," said analysts.
Keeping their target price of 100p, they added: "We believe the advertising loss would not be significant as ITV can bring in other celebrity names."
ITV's fall was mirrored by the wider market. The FTSE 250 fell 56 points to 11771 and the FTSE 100 shed 28 points to 6054.
11.50am: Middle East protests keeps benchmark index under pressure
As unrest rippled across the Middle East, investors were once again heading for safe havens. Defensives were in favour with Centrica, Scottish & Southern Energy and GlaxoSmithKline rising 1.19pc, 1.16pc and 0.8pc respectively.
With investors steering clear of riskier assets such as banks – Royal Bank of Scotland led the laggards, losing 2.6pc – the benchmark index took a turn for the worse. The FTSE 100 edged down 18 points to 6065 and the FTSE 250 fell 51 points to 11777.36.
However, the prevailing sentiment was indecision, with no direction from the US today where traders have downed tools for a public holiday and no economic data in the UK. Investors are also keeping their powder dry ahead of revised gross domestic product figures later this week. The first reading, published last month, for the final quarter of 2010 showed that the economy shrank by 0.5pc and investors will be looking to see whether the revised figures show any improvement.
There is also still uncertainty over when interest rates will be raised. Minutes of February’s Bank of England Monetary Policy Committee meeting, published on Wednesday, will show how close this month’s vote was on whether rates should be increased.
Philip Shaw, an analyst at Investec, said:
“Last week markets were clearly nervous, closely scrutinising Mervyn King’s words in the press conference that followed the publication of the Quarterly Inflation Report for further clues on the timing of the first interest rate hike. As we turn to the week ahead, markets are likely to remain jittery about the timing of the MPC’s next move, so the minutes of February’s MPC meeting, due during the week, will be important – particularly given they will tell us the balance of the vote.”
Amongst the mid-caps, CSR tumbled 7.4pc after the chip maker agreed to buy America's Zoran in an all-share deal, which will add imaging and video to CSR's wi-fi, bluetooth and GPS location technologies.
Joep van Beurden, CSR chief executive, said the $679m deal would enable CSR to target the growing number of devices that combine imaging and video with wireless and location services.
Analysts at RBS kept their "hold" rating, saying:
"While we see both pros and cons to this smartly structured deal, the big questions for us are: 1) will CSR be able to able to integrate ZRAN into CSR in a similar fashion to the successful SiRF acquisition; 2) will CSR be able to leverage synergies (cost and product) between both companies to such an extent so as to offset the more mature end markets of ZRAN, ie, digital cameras, printer imaging; 3) will further acquisitions be required."
10am: Banks and energy stocks led Britain's top share index lower on Monday as concerns over political unrest in the Middle East and North Africa prompted investors to flee from risk.
The FTSE 100 index was down 26.37 points, or 0.4 percent, at 6,056.62, hovering near its recent 32-month highs.
Traders said the index lacked direction with the US market closed on Monday for the Presidents Day holiday and no important domestic economic data due in the UK.
Energy stocks were lower as crude oil rose 2pc on fears that unrest in Middle East and North Africa could disrupt oil supplies.
"The situation is a tough one near term and does create uncertainty, but can be seen in a positive light as we're potentially going from a series of dictatorships to democracy," Keith Bowman, an analyst at Hargreaves Lansdown, said.
BP said it has suspended preparations for exploratory drilling for oil and gas in western Libya due to growing unrest in the north African country.
Miners bounced marginally after Beijing on Friday raised banks' required reserves by 50 basis points, showing no let-up in a campaign to combat inflation.
Precious metal miners Fresnillo and Randgold Resources were up 3.1 and 2.4pc respectively as gold rose to a seven-week high as spreading unrest in the Middle East burnished the metal's appeal as a safe haven.
Invensys rose 5.3pc after the Observer newspaper reported on Sunday the British engineering firm is being eyed as a potential takeover target by several international rivals, citing "city sources".
Banks, which rose 2.3pc last week after solid results in the sector including from Barclays, were the biggest fallers. UK banks have risen 10.3pc since the start of the year.
Royal Bank of Scotland, which reports later this week, was down 1.9pc.
Minutes from the Bank of England's rate setting meeting are due out on Wednesday, with investors looking for clues as to how close the voting was for a rise in interest rates.
6am: Oil prices bounded, with Brent crude rising to more than $103 a barrel amid investor concern that violent protests in Libya could disrupt crude supplies. In currencies, the dollar weakened against the yen but was up against the euro.
Japan's Nikkei 225 stock average was flat at 10,846.73 as the index pared robust gains made last week.
Blue chip manufacturers like Honda and Toshiba were down, each by about 1pc.
Hong Kong's Hang Seng index lost 0.4pc to 23,508.62. Again, however, oil companies were on the rise. Sinopec, Asia's biggest oil refiner by volume, rose 0.2pc.
State-owned oil company CNOOC Ltd. rose 1.6pc and PetroChina Ltd., China's biggest oil and gas producer, was up 0.4pc.
Benchmarks in Taiwan, Singapore and New Zealand also retreated, while China's benchmark Shanghai Composite index rose 0.1pc.
South Korea's Kospi fell 0.5pc to 2,002.84 and Australia's S&P/ASX 200 shed 0.8pc to 4,895.40.
Sentiment was also hurt by a move on Friday by China to control inflation. Beijing ordered its banks to hold back more money as reserves, raising the required level by 0.5pc of deposits.
Shares of Australian resource companies, which rely heavily on growing Chinese demand, slumped in response.
BHP Billiton Ltd. fell 1.8pc. Rival Rio Tinto Ltd. also lost 1.8pc. Japanese stocks also sensitive to Chinese demand dropped, including Komatsu Ltd., a maker of construction equipment, by 0.6pc, and Hitachi Construction, down 1.3pc.
While keeping an eye on Mideast unrest, analysts said Asian markets had performed well recently and were perhaps due for some profit-taking.
"I think the focus is on the nervousness in the Middle East with the potential disruption to oil supplies. The markets have been pretty volatile in the past few weeks because of this added geopolitical uncertainty, but Asian equities had a pretty good bounce last week, so maybe this is a little correction to that," said David Cohen, economist at Action Economics in Singapore.
Friday's Market Report:
FTSE today: market report - as it happened February 18, 2011
Glittering gold puts a shine on African Barrick
Thursday's Market Report:
Banks bounce back as blue-chips tread water
FTSE today: market report - as it happened February 17, 2011
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