Miners dragged the FTSE lower on Monday, after doubt surfaced about Glencore's potential merger with Xstrata , while banks waned in the absence of a debt deal for Greece.

The FTSE 100 index <.FTSE> ended down 8.87 points, or 0.2 percent, at 5,892.20, remaining near six-month highs after strong U.S. jobs data boosted appetite for cyclical stocks. It had risen 4 percent over the previous four trading days.

The bears have effectively had to remove themselves from the field after Friday's macro data and only a retracement to 5,800 by the FTSE 100 would give them any real encouragement, Silverwind Securities trader Darren Sinden said.

Sinden said the prospect of a so-called golden cross on the weekly chart between the 20-day and 50-day moving average lines, as the faster moving line (20-day MA) closes in on its slower moving peer from below, will encourage the bulls longer term.

Having led the FTSE 100 higher so far in 2012, miners <.FTNMX1770> were the top fallers.

Glencore, which had risen 17 percent over the previous three trading days, fell 4.5 percent as brokers said the commodities trader might have to pay a premium of up to 20 percent to satisfy shareholders in its proposed $80+ billion merger with Xstrata .

UBS estimated synergies at around $1 billion (631 million pounds) between the two firms and said: These are sufficient for Glencore to pay around a 20 percent premium on the undisturbed price of Xstrata.

Xstrata, which had jumped 20 percent since news of the takeover talks, fell 1.7 percent after the Financial Times reported Glencore would offer 2.8 new shares for each Xstrata share, an 8 percent premium.

HB Markets downgraded Xstrata to sell, saying: The premium is on the light side, but we struggle to see that Glencore would agree to any significant upward revisions. And given recent price action, most of the upside is therefore priced in.


Banks <.FTNMX8350>, which have risen 18 percent this year, ebbed with doubts resurfacing over Greece's ability to strike a deal to avoid a chaotic default, which could cripple the financial system.

German Chancellor Angela Merkel told Greece on Monday to make up its mind fast on accepting terms for a new EU/IMF bailout. Greek political leaders responded by delaying their decision for another day.

It is easy to see where this caution is coming from. The sovereign crisis last year was, we reckon, quintessentially a piece of hard to price macro risk, analysts at BofA Merrill Lynch said. It would be the sign of a die-hard optimist of Bruce Willis-esque proportions to be willing to rule out similar 'macro' angst this year.

Lloyds Banking Group , however, bucked the weaker trend, up 2.6 percent with traders citing a positive readacross from a Halifax report which showed British house prices rose 0.6 percent in January.

Defensives dominated the risers list as risk appetite waned with dividend favourite Vodafone up 1.6 percent and Imperial Tobacco 0.8 percent higher.

Oil major BP rose 1.0 percent ahead of results, while oil explorer Cairn climbed as it commenced trading without rights to a 160 pence per share cash distribution, and post completion of the 13-for-33 share consolidation.

Collins Stewart said Cairn trades at a 19 percent discount to its core net asset value after the distribution, adding thst to fully close the discount Cairn needed to disclose a work programme involving drilling activity.

It was not all bad news for the miners, Randgold Resources rose 2.2 percent after saying profit in 2011 leapt 259 percent to $433 million and it would double its dividend to 40 cents.

A trader said the stock remained attractive given the correlation with the price of gold, the relative fair value of which he saw as being around $2,200 an ounce.

(Editing by Dan Lalor)