London's FTSE 100 falls as AstraZeneca drops on megamerger report

London's FTSE 100 index fell on Monday as heavyweight AstraZeneca slipped after a report that it approached Gilead Sciences for a merger, while fears of a slower economic recovery on worries about surging corporate debt also dented sentiment. The FTSE 100 slipped 0.3% and AstraZeneca shed 3%. Bloomberg News reported on Sunday about the British firm's approach for a possible megamerger with its U.S. rival to form one of the world's largest drug companies.

British healthcare stocks lagged the broader market on Monday. Oil and gas stocks jumped 2.6%, supported by higher crude prices. The blue-chip index is now about 16% away record highs hit in January on a gradual reopening of the UK economy and improving economic indicators.

But an industry body, TheCityUK, has said about a third of the debt being taken on by British firms under the government's emergency COVID-19 lending plans could be unsustainable, raising the need for fresh capital from new investors. "The lobby group warned that up to 36 billion pounds ($45.67 billion) of recent government-backed loan initiatives risk turning toxic. It's not an easy economic recovery to manage, even assuming no second wave," said Chris Bailey, European strategist at Raymond James.

The mid-cap FTSE 250 was up 0.3%, with home improvement group Kingfisher rising 2.8% after RBC Capital Markets raised its rating on the company's stock to "outperform". Plus500 Ltd slid 8% after the online trading platform said its quarterly revenue took a hit from client trading wins.

Oxford Biomedica climbed 6% after the gene and cell therapy firm said it signed a new manufacturing agreement to help it scale up production of AstraZeneca's potential COVID-19 vaccine to cater to demand in the United Kingdom and Europe. ($1 = 0.7882 pounds)