By Julien Ponthus
LONDON (Reuters) - UK shares edged lower on Monday as investors counted the cost of construction group Carillion's (L:CLLN) collapse, including supply chain disruption and higher costs for its joint venture partners such as Balfour Beatty (LON:BALF) and Galliford Try (LON:GFRD).
The FTSE 100 (FTSE) fell 0.12 percent, with Carillion shares suspended from trading after one of the biggest UK corporate failures in years.
The weakness in equities came as the pound currency held onto a strong gain marked up on Friday following a media report, later denied, that the Dutch and Spanish governments were open to a deal for Britain to remain as close as possible to the EU after Brexit.
"It is still unclear how the collapse of (Carillion) will impact the broader UK economy, particularly further down the supply chain," said Michael Hewson, chief market analyst at CMC Markets.
Balfour Beatty fell 3.3 percent, Galliford Try dropped 7.3 percent and Carillion supplier Speedy Hire dropped 5.7 percent. Some other industry players rose on the hope they could acquire contracts from Carillion. Kier Group (LON:KIE) rose 3.5 percent.
Rival outsourcer Serco (L:SRP) jumped 7.4 percent as investors speculated it could pick up a chunk of lucrative healthcare facilities management work.
UBS analysts said Carillion's collapse might ease competition in the sector, but it may not be a game-changer.
"We think the impact will likely be small given the fragmented nature of the market", they said.
Engineering firm GKN (L:GKN), trying to fend off an offer of 405 pence per share from turnaround specialist Melrose (L:MRON), led the blue-chip index with a 4.1 percent rise. City AM reported that U.S. buyout house Carlyle was planning a bid of its own.
Melrose (up 1.4 percent) said it planned to meet GKN shareholders to convince them of the benefits of its 7 billion- pound offer, which GKN management had rejected.
Acacia Mining (L:ACAA) rose 1.5 percent after it reported gold production in the last quarter of 2017 exceeded expectations.
Gold prices on Monday rose to their highest since September, buoyed by a weaker U.S. dollar, which slumped to three-year lows against a basket of currencies.
BP (L:BP) and Royal Dutch Shell (L:RDSa) retreated 0.4 percent and 0.3 percent respectively as oil prices held just below December 2014 highs.
Financials also weighed on the index, with Standard Chartered (LON:STAN) losing 2 percent