London slides as takeover moves fail to inspire gains

The FTSE 100 Index has risen by 6 per cent this month and with the top flight at its best level since late April there was little appetite for further buying, leaving the benchmark index 25.06 points lower at 5573.42.

The mood was similar on Wall Street, where US stocks have been enjoying their best month since March 2000 but failed to sparkle by the time of London's close of business.

Fresh concerns about the European banking system hampered trading after Moody's Investor Service downgraded the debt of Anglo Irish Bank.

The lacklustre performance came despite a renewed bout of corporate activity following major deals involving Dove and Flora owner Unilever and Asda supermarket business Wal-Mart.

Unilever's 2.3bn deal to buy American haircare firm Alberto Culver gave a boost to the share price of the Anglo-Dutch firm, which closed 23p higher at 1816p after its swoop for brands such as VO5, TRESemme and Simple.

In the United States, shares in Southwest Airlines jumped after announcing it will buy AirTran Holdings, while Wal-Mart Stores was in the spotlight after a proposal to buy South African Massmart Holdings.

The acquisition for about 4.25 billion US dollars (2.7bn) is being seen as a move to jump-start growth beyond its sluggish US business.

Southwest Airlines, the nation's largest low-cost airline, plans to buy AirTran Holdings for $1.04bn to expand into major East Coast markets as well as growth in the Caribbean.

The cash and stock deal is the first among leading low-cost airlines and represents a 69 per cent premium over Friday's closing price of AirTran stock.

The move jump-starts Southwest's growth strategy, which was suspended in 2008 when the airline industry began slashing capacity to offset soaring fuel costs and sagging travel demand during an economic recession.

"What is an interesting opportunity to us is threefold: (AirTran hub) Atlanta, small cities and international," Southwest chief executive Gary Kelly said. "And clearly we have those as opportunities post-AirTran as compared to without AirTran."

The session was also notable for gold prices remaining at near 1,300 dollars an ounce, while an upbeat report on the UK economy from the International Monetary Fund helped the pound against the dollar and euro.

In the day's corporate results, shares in building supplies firm Wolseley were 10p lower at 1520p after it announced a modest 1 per cent rise in annual trading profits and highlighted an uncertain outlook for core markets in the US and UK.

It was joined on the fallers' board by Smiths Group, which dropped 20p to 1207p after BofA/Merrill Lynch lowered its recommendation ahead of this week's full-year results by the world's biggest maker of airport scanners.

Other broker notes had a positive impact, with software firm Sage rising 81/8p to 2661/4p, following a review of the IT sector by Barclays Capital, while Premier Inn firm Whitbread was up 6p to 1628p due to an upgrade by Credit Suisse.

Elsewhere, HSBC slipped 53/8p to 6607/8p following Friday night's confirmation that chief executive Michael Geoghegan will leave the banking giant.

After a week of speculation over boardroom bust-ups and rumours surrounding Mr Geoghegan's exit from the firm, HSBC confirmed finance boss Douglas Flint as chairman and Stuart Gulliver as the new chief executive.

Outside the top flight, the Unilever deal was mirrored in the FTSE 250 Index by Imperial Leather owner PZ Cussons with its acquisition of tanning firm St Tropez. The 62m purchase failed to inspire the share price, which slipped 3/4p to 364p.

The biggest FTSE 100 riser was Sage.