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Feb 28 (Reuters) - UK's FTSE 100 fell on Monday after Western nations imposed tough new sanctions on Russia for its invasion of Ukraine, while oil major BP slid following its decision to exit the country by abandoning its stake in Russian oil giant Rosneft.
The blue-chip FTSE 100 closed down 0.4% after falling as much as 1.7% earlier. RIA news agency quoted Ukrainian presidential adviser Mykhailo Podolyak saying that officials from Russia and Ukraine ended peace talks on Monday and will return to their respective capitals for further consultations before a second round of negotiations.
"It possibly suggests that there may be some slowdown in the intensity of the war ahead of this next round of talks. This would be pro-risk," Stuart Cole, head macro economist at Equiti Capital, said.
BP fell 4.0% after deciding to exit its nearly 20% stake in Russian oil giant Rosneft.
"BP's decision to pull out is adding to the overall negative sentiment that Russian businesses are going to find themselves increasingly isolated in terms of tie-ups and partnerships with the West," Cole added.
Russia-exposed miners including Polymetal, EVRAZ and Petropavlovsk declined between 15.7% and 56.0%, while depository shares of Russian bank Sberbank Rossii PAO and Gazprom dropped 74.3% and 50.7%, respectively.
Banks fell 3.7%, tracking their European peers, as investors assessed the impact of sanctions against the Russian financial system, including blocking certain banks from the SWIFT payments system.
Defence player BAE Systems jumped 10.2% as Germany's plans to raise defense spending boosted the sector.
The FTSE 100 has outperformed its pan-European peers so far this year, helped by a jump in heavyweight commodity stocks due to geopolitical tensions.
The domestically focussed mid-cap index rose 0.8%, with nanotechnology tools and services provider Oxford Instruments surging 31.9% to the top of the index on a possible $2.4 billion takeover offer from Spectris.
Associated British Foods fell 2.0% after its finance chief warned that the group could be impacted if the Russia-Ukraine conflict drives up the global price of wheat. (Reporting by Amal S and Bansari Mayur Kamdar in Bengaluru; Editing by Rashmi Aich and Andrew Heavens)
