Britain's top shares fell on Monday, dented by GlaxoSmithKline on concerns over new drug Relovair, while Wm Morrison firmed after issuing its Christmas trading update, ahead of seasonal reports from the UK's biggest retailers this week.

GlaxoSmithKline shed 2.6 percent, knocking 7.7 points off the FTSE 100 index, after it announced plans to file its key once-a-day inhaled lung treatment Relovair for regulatory approval in mid-2012 following the release of a batch of clinical trials results.

GSK has stated that it has clearly seen enough to warrant regulatory filings globally in COPD. However, the data are probably not as clean as we would have liked and although the lack of superiority versus (its existing twice-daily drug) Advair probably has little relevance to approvability, we believe that it could limit its commercial positioning, Shore Capital said in a note.

Relovair, which is being developed with U.S.-based Theravance , will be filed for chronic obstructive pulmonary disease (COPD) in the United States and Europe in the middle of the year.

The UK benchmark was down 2.69 points, or 0.1 percent, at 5,646.99 by 0943 GMT, having risen 0.5 percent on Friday.

Traders awaited monetary policy announcements from the European Central Bank and the Bank of England on Thursday, with investors keen to hear ECB president Mario Draghi's latest take on any action to ease the debt crisis.

(This week) it's really just a question of any comments that might come out of the ECB interest rate meeting in terms of easing, in terms of how the euro zone situation is going on, Richard Hunter, head of equities at Hargreaves Lansdown, said.

It is unfortunately the European situation which is the one real fly in the ointment at the moment. It's difficult to see the market moving forward before there's some resolution in place there.

Morrison edged 0.1 percent higher after the grocer's festive trading update, with Hargreaves Lansdown's Hunter pointing out the general view of the shares is a cautious buy.

A raft of British retailers, including Tesco and Marks & Spencer , are set to report their Christmas sales figures this week, throwing the impact of heavy discounting on profit margins and prospects for consumer spending in 2012 into focus.

Britain's store groups engaged in a frenzy of promotions and price cutting in the run-up to the festive season, reminiscent of the start of the recession in 2008.

Struggling HMV shed 6.7 percent after the entertainment retailer's Christmas trading update did little to improve investor sentiment towards the firm, which last month warned it could go out of business.

Banks <.FTNMX8350> added the most points to the blue-chip index, with Royal Bank of Scotland , up 0.8 percent, the highest riser as JPMorgan Cazenove upgraded its rating for the part-state-owned lender to neutral from underweight on hopes for the sale of its Global Banking & Markets (GBM) business.

We believe that a restructuring of GBM operations at RBS to scale back capital and cost intensive businesses is likely to be negative for revenues but accretive to longer term returns, JPMorgan said in a note.

Espirito Santo also weighed in on Barclays , ahead 0.2 percent, recommending the bank's stock given its strong capital ratios, robust liquidity profile and positive earnings momentum.

The euro zone debt crisis is firmly on the agenda on Monday when German Chancellor Angela Merkel and French President Nicolas Sarkozy meet in Berlin, although market observers expected little of any great significance to emerge.

Merkel and Sarkozy are holding a working lunch centered on preparing for upcoming summits, notably a gathering of European Union leaders on Jan 30.

On the political front the market is not expecting a lot from the Sarkozy Merkel meeting today as Merkel has very little domestic room to manoeuvre, said Lex van Dam, hedge fund manager at Hampstead Capital, which manages $500 million of assets.

(Additional reporting by David Brett and Jon Hopkins; Editing by Jon Loades-Carter)