Britain's leading shares were barely weaker on Monday, propped up by gains in oil companies and miners such as BG Group as prices of crude oil and some metals traded near record levels, although most heavyweight sectors such as banks and pharmaceuticals eased.
By 1022 GMT, the FTSE 100 share index was down 1.8 points at 6,130.9, having risen 51 points on Friday to a 5-year closing high. But the UK market outperformed weaker European indexes as record crude oil prices buoyed heavyweight oil companies Royal Dutch Shell (RDSa.L: Quote, Profile, Research) and BP.
Coal-miner Xstrata was the top FTSE 100 gainer, up 4.4 percent, while Anglo American and BHP Billiton each added more than 1 percent.
BG Group was the biggest riser in the oil and gas sector in the FTSE 100, adding 2.6 percent. Among mid-caps, shares in oil drilling contractor Abbot Group jumped 9 percent after it announced it was buying its Norwegian rival Songa Drilling for 247 million pounds. Dealers said investors welcomed the deal, which will boost earnings from 2007.
The only thing that is holding the market up is the oil, gas, metals and mining sectors. Almost all the other components of the market are in decline which is a concern because that means that should oil, gas and mining equities go sideways then the FTSE overall will decline, said Graham Neale, analyst at stockbrokers Killik.
We think the fundamentals are in place but nevertheless we think that having passed through 6,000 the market is going to take some time and consolidate.
Shares in fixed-line telecoms firm BT Group tacked on more than 2 percent, lifted by news that its pension scheme actuary estimated that a state guarantee covered about three-quarters of the scheme's liabilities.
Dealers said hopes for further consolidation in the industry had risen following news that German state development bank KfW agreed to sell a 4.5 percent stake in Deutsche Telekom to U.S. private equity firm Blackstone.
If private equity is taking a stake in a fixed-line business, it shows people think there is good value there, said a dealer.
M&A and disposal hopes fuelled several mid-caps, with music group EMI up 3 percent after the Sunday Times reported it was preparing to resume talks with U.S. rival Warner Music Group that could lead to the creation of the world's third-biggest music company.
Northern Foods added 3.6 percent as several weekend newspapers said the company may dispose of certain assets.
(Additional reporting by Sophie Hares and Matt Falloon)