FTSE almost static

Takeover moves provided the main interest for the London market today despite economic worries hindering progress for the wider FTSE 100 Index.

Investors welcomed Cairn Energy's plans to sell 51% of its Indian operations to Vedanta Resources for more than £5bn (€6.1bn) - promising a multi-billion windfall for shareholders.

But Aviva's rejection of a £5bn (€6.1bn) move for its general insurance arm by rival RSA was poorly received, leaving both down more than 2%. The Footsie crawled 0.7 points ahead to 5276.1 after being in the red for much of the session.

Dismal growth figures from Japan - showing growth slowing to 0.4% between April and June, suggested a stalling global recovery as the nation lost its place as the world's second biggest economy to Asian neighbour China.

A mixed session in Asia was followed by a sluggish start for the Dow Jones Industrial Average after housing and manufacturing data disappointed, although Wall Street crept into positive territory later.

The pound enjoyed a decent session against the euro, gaining to 1.22, and edged up to 1.57 against the dollar in a thin summer session.

"Aside from the Vedanta/Cairn India deal there was little around on the local agenda to provide much meaningful direction," IG Index's senior sales trader Yusuf Heusen said.

In London shares in both firms headed the leaderboard on news of the deal, which could land Cairn Energy up to £5.5bn (€6.7bn) for the stake in its Indian arm. Cairn - which will retain a stake of at least 11% in the Indian business after the sale - added 24.9p to 493.2 or 5%. Vedanta was close behind, up 100p to 2153p.

The leading faller was Aviva, down 9.5p at 377.9p after snubbing RSA's proposal to buy its home and motor insurance operations in the UK, Canada and Ireland.

Aviva said it had no intention of splitting its general insurance and life assurance divisions, although it added that it was willing to address investor concerns over the company's strategy after recent underperformance of its shares. Suitor RSA saw shares dip 2.9p to 124.5p or 5%.

Meanwhile shares in oil giant BP were down as investors reacted to an announcement from the state of Alabama that it is suing BP and two other companies over the Gulf of Mexico oil disaster.

Shares in the beleaguered firm were 6.65p down at 409.75p, after the state said it was making the claim against BP, Halliburton and Transocean for the "catastrophic harm" caused by the crisis. BP has made provisions of more than £20bn (€24.4bn) for the spill so far.

Communications provider Inmarsat's shares also shed 2.5p to 686p as challenging trading in its core maritime business continued to weigh on the stock.

The biggest Footsie risers were Cairn Energy up 24.9p to 493.2p, Vedanta ahead 100p to 2153p, African Barrick Gold up 13.5p to 562.5p and Xstrata up 18.4p to 1014p.

The biggest Footsie fallers were Aviva down 9.5p to 377.9p, RSA off 2.9p to 124.5p, RBS down 1.05p to 45.9p and Capital Shopping Centres off 5.3p to 320.9p.