LONDON (Reuters) - British blue chips outperformed their European peers on Monday morning as fears over Britain's European Union exit terms sank the pound, giving an accounting boost to stocks with foreign revenues in dollars.
Oil majors BP <BP.L> and Royal Dutch Shell also helped keep the FTSE in the black, boosted by higher oil prices after top exporter Saudi Arabia announced a supply cut in December.
The FTSE 100 <.FTSE> was up 0.2 percent by 1015 GMT, while the domestically focussed mid-cap index FTSE MID 250 <.FTMC>, which is widely seen as a proxy to play Brexit fears, was down about 1 percent.
Most European bourses were trading in negative territory, with the Euro Stoxx retreating 0.4 percent.
"The FTSE is seen leading the charge in Europe, drawing support from a Brexit weakened pound and rallying oil price", wrote Jasper Lawler from London Capital Group ahead of the open.
The pound was close to one percent lower against the dollar after British Prime Minister Theresa May was reported to have called off a special cabinet meeting on Brexit amid signs she may not get parliamentary backing for her proposed compromise with Brussels. A government source said no cabinet meeting had been scheduled for Monday.
Miners, which have strong revenue flows in dollars, also pushed blue chips higher with Rio Tinto <RIO.L> and BHP Billiton <BLT.L> up respectively 2.9 percent and 2.8 percent.
British American Tobacco <BATS.L> shares posted the worst performance of the index, falling as much as 11 percent to its lowest since February 2014 after a Wall Street Journal report that the U.S. Food and Drug Administration plans to pursue a ban on menthol cigarettes.
Imperial Brands <IMB.L> shares were the second biggest losers, down 3.1 percent as traders said BAT has the greatest exposure to menthol cigarettes.
Shares in London-listed Shire <SHP.L> rose 2.5 percent after Takeda Pharmaceutical <4502.T> said it would hold an investor vote on its $62 billion acquisition of the British company and aimed to close the deal on Jan. 8, signalling its confidence in securing the required support.
AstraZenaca <AZN.L> added 1.7 percent after the biggest clinical trial so far to assess a new class of diabetes pills showed that its Farxiga can prevent heart failure and cut the risk of kidney problems in a broad range of patients.
(Reporting by Julien Ponthus; Editing by Adrian Croft)