The FTSE 100, which declined by 1.2% last week, was down a further 0.1% this morning at 6,771.

In Iraq, army militants killed more than 279 rebels yesterday as Sunni Muslim insurgents moved to take over the territory north of Baghdad.

Fears over the unrest disrupting oil supplies continued to push prices higher, given that Iraq is OPEC’s second-largest oil producer. Brent crude futures rose $0.390 to $112.900 per barrel at 09:00, according to the ICE.

Meanwhile investors were also looking ahead with caution to the latest two-day policy meeting at the Federal Reserve, which kicks off tomorrow. Nevertheless, analysts widely expect the US central bank to continue tapering asset purchases by $10bn a month to $35bn.

Michael Hewson, Chief Market Analyst at CMC Markets UK, said: “Given that we still remain fairly close to record highs, we’re going to need to see a significant reduction in tensions, as well as a significant improvement in the data coming out of the US economy, to feel confident about the next move in equity markets this week.”

Smith & Nephew falls as M&A hopes dissolve

Smith & Nephew declined after medical device maker Medtronic snapped up Irish rival Covidien for $42.9bn. It had been recently rumoured that Medtronic was considering a takeover of Smith & Nephew.

Nevertheless, yet more consolidation in the healthcare sector was giving other stocks a boost this morning, including AL Noor Hospitals and NMC Health.

Oil stocks were making gains as shares continued to track the price of oil higher on the back of developments in Iraq. Tullow, Petrofac and Shell were among the best performers in London.

Miners were also putting in a decent performance as metal prices rose with BHP Billiton, Rio Tinto, Anglo American, Randgold and Centamin inching higher.

Rolls-Royce was in the red after analysts at Societe Generale cut their rating on the stock from ‘hold’ to ‘sell’, saying that there is “some risk of a further earnings downgrade” at the engine maker.

FTSE 100 – Risers
Fresnillo (FRES) 818.00p +1.36%
BHP Billiton (BLT) 1,872.50p +1.22%
Petrofac Ltd. (PFC) 1,270.00p +1.03%
Tullow Oil (TLW) 850.00p +1.01%
Randgold Resources Ltd. (RRS) 4,602.00p +0.83%
Glencore (GLEN) 320.55p +0.80%
Rio Tinto (RIO) 3,040.50p +0.76%
British American Tobacco (BATS) 3,541.50p +0.61%
RSA Insurance Group (RSA) 488.90p +0.60%
Anglo American (AAL) 1,417.00p +0.50%

FTSE 100 – Fallers
Smith & Nephew (SN.) 1,047.00p -2.24%
BT Group (BT.A) 385.80p -2.16%
easyJet (EZJ) 1,434.00p -1.58%
Ashtead Group (AHT) 874.00p -1.47%
Persimmon (PSN) 1,195.00p -1.32%
Barratt Developments (BDEV) 341.90p -1.27%
CRH (CRH) 1,640.00p -1.15%
Morrison (Wm) Supermarkets (MRW) 190.20p -1.09%
G4S (GFS) 254.20p -1.09%
Rolls-Royce Holdings (RR.) 1,009.00p -1.08%

Source: ShareCast