Britain's FTSE 100 backtracked from last week's strong gains by midsession Monday, led lower by Glencore and Xstrata as concern about prospects for their planned merger helped spark a bout of profit-taking in the two stocks.

London's blue chip index was down 17.14 points or 0.3 percent at 5,883.93 by 1207 GMT, still not far from the six-month high scaled in the previous session.

The index was weighed down as stocks neared overbought territory, according to the relative strength index, and with Wall Street futures pointing to a weaker open. The Dow Jones closed at 11-year high on Friday after U.S. job creation fueled investor optimism.

Miners edged lower having led the FTSE 100 higher in 2012, as fund managers rotated into cyclicals following a massive underperformance in 2011 and with the outlook for the United States improving,

Glencore fell 4 percent, paring recent gains as brokers said the commodities trader would likely need to pay a larger premium -- up to 20 percent -- in a proposed $88 billion merger with Xstrata to satisfy shareholders.

Xstrata, meanwhile, shed 2.3 percent ater a Financial Times report said its shareholders are set to receive 2.8 shares in Glencore for each share held, or just an 8 percent premium to Xstrata's share price before news surfaced of the merger talks.

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

It wasn't all doom and gloom in the sector. Randgold Resources gained 2.8 percent after saying profit in 2011 leapt 259 percent to $433.4 million and it would double its dividend to $0.40.

Traders said recent fears of decreased guidance have been overplayed -- valuation momentum, according to Thomson Reuters Starmine data, is among the lowest in its peer group.


Banks, which have risen more than 18 percent so far 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.

The Greek government must tell the European Union whether it accepts the painful terms of a new bailout deal but the country's coalition parties are still trying to iron out several contentious points.

Financial markets though are generally still optimistic a deal will be done, although are just beginning to price in a little more fear it won't, Louise Cooper, markets analyst at BGC Partners, said.

But from what the politicians and players are saying the probability of Greece heading towards a messy and chaotic default in March is increasing. Let's just hope that the more optimistic financial markets are proved right, she said.

Lloyds Banking Group bucked the weaker trend, with traders citing a positive readacross from a Halifax report which showed British house prices rose by 0.6 percent in January, almost completely reversing the previous month's decline.

And Cairn Energy commences trading today without rights to the 160 pence per share cash distribution, and post completion of the 13-for-33 reverse split.

Collins Stewart said post the distribution Cairn trades at a significant 19 percent discount to its core net asset value, noting to fully close the discount Cairn needs to disclose a work program involving drilling activity.