By Helen Reid
LONDON (Reuters) - Oil majors dragged Britain's top share index down on Monday as political risk gripped Europe and caution set in again on Brexit, weighing on sterling.
The FTSE 100 <.FTSE> was down 0.4 percent by 0828 GMT as stocks across Europe fell 0.7 percent. Italy's FTSE MIB tumbled 2 percent after stern words from the European Union on Italy's budget sent bond yields to new highs.
Oil majors Royal Dutch Shell
"We think this move makes good sense for both parties – Lloyds gets access to Schroders's investment management capabilities while Schroders gets access to Lloyds distribution," wrote Bernstein analysts.
Overall, the FTSE 100 has held up relatively well compared with its European peers in the past weeks. Brexit negotiations are weighing on the pound, which usually helps the exporter-heavy index.
On Monday, sterling fell as traders reassessed the chances of a breakthrough in Brexit negotiations after negative weekend media reports.
Goldman Sachs analysts said international UK stocks should be relatively insulated from Brexit risks because they're less exposed to domestic economic weakness and they benefit when sterling falls.
"We find that insulation still exists: the correlation remains negative, although less so than at the beginning of the year," said analysts at the U.S. bank.
Analysts overall have cut their estimates for FTSE 100 earnings as the support from sterling fades.
"With a new, simplified strategy to rebuild profitability and a recapitalised balance sheet, Countrywide is on a firmer footing than it has been for some time," wrote Peel Hunt analysts.
Graphic: FTSE 100 analysts downgrade - https://reut.rs/2PlwMKy
(Reporting by Helen Reid, editing by Larry King)