UK stocks rise as financial shares gain on M&A reports

Britain's FTSE 100 was on course for its best day in nearly a month on Monday, as financial stocks benefited from reports of a possible Commerzbank-Deutsche Bank merger, while mid-cap banks Charter Court and OneSavings also gained on deal talks.

The main index, whose members get a large part of their revenue in dollars, also benefited from a weaker pound. Sterling fell ahead of crucial Brexit votes in parliament this week.

The FTSE 100 advanced 1 percent and the FTSE 250 was 0.4 percent higher by 0941 GMT. Ireland's main index, seen as a gauge of Brexit nervousness, underperformed European stocks and was down 0.1 percent.

An index of financial stocks was on track for its best day in almost a month after a source told Reuters on Saturday that Deutsche Bank's board had agreed to hold talks with rival Commerzbank on the feasibility of a merger.

British Airways owner IAG added 1.2 percent after a Citigroup rating upgrade.

The FTSE 250 saw some steep moves with OneSavings surging 9.8 percent after talks with fellow challenger bank Charter Court Financial Services regarding a possible merger, which analysts at Investec called "a marriage made in heaven".

"Although both OSB and Charter Court offer excellent performance metrics on a stand-alone basis, we believe that the  combination should prove materially value-enhancing for both sets of shareholders," Investec analysts wrote.

The rise placed OneSavings on course for its biggest one-day gain since August 2016 and Charter Court Financial jumped 9.1 percent on track for its best-ever day.

London-listed shares of Ryanair were 1.6 percent lower. The low-cost carrier said its board has passed resolutions to protect its EU airline licences after Brexit, but traders cited concerns about the possible disruption from Brexit even despite the contingency plans.

Shipping services provider Clarkson slid nearly 8 percent on the midcap index after reporting a fall in earnings and providing cautious outlook for financial segment.

Cairn Energy dropped 6.1 percent after saying it expected a delay in the timetable for an award in relation to its proceedings against India.

Builder Kier Group slumped 17.6 percent on the small cap index after forecasting higher debt for 2018.

"After several weeks of gains, last week's losses have sown a few doubts, about the longer term economic outlook," CMC Markets analyst Michael Hewson said.