FTSE flat as Glaxo weighs and Merkel meets Sarkozy

London’s blue-chip equities suffered a reversal of early gains on Monday as investors held back from risk ahead of the first meeting of the year between Angela Merkel and Nicolas Sarkozy.

The FTSE100 was down 0.095 to 5644.83 at 1010GMT, dragged lower by index heavyweight GlaxoSmithKline, which shed 3.07% on concerns over new drug Relovair.

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.

Morrison edged 0.7% higher despite reporting that sales growth slowed more than expected over the festive period.

Royal Bank of Scotland rose 0.98% to 20.71p after JP Morgan Cazenove upgraded its rating for the past-state-owned lender to neutral from underweight on hopes for a sale of parts of its investment banking business.

Barclays rose 0.24% to 186.85p after Espirito Santo recommended the bank's stock given its strong capital ratios, robust liquidity profile and positive earnings momentum.

Fresnillo jumped 1.87% to 1692p while InterContinental Hotels Group rose 1.4% paced after Deutsche Bank AG recommended both companies.

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.

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