Shares in British American Tobacco (BAT) went into reverse after an initial spike following the announcement of its proposed merger deal with US manufacturer Reynolds,
The FTSE 100 firm had seen gains of 2.3 per cent before finishing the session as the biggest faller after investors soured to the deal.
Shares in BAT closed down 137p to 4,666p while Imperial Brands closed up 103.5p to 3,965.5p.
Shares in fashion house Burberry soared on the London market amid mounting speculation over a merger with a US rival.
Burberry closed up 3.1 per cent, or 45p, to 1,495p after financial blog Betaville said US luxury bag maker Coach was working with investment bank Evercore to thrash out a deal for the firm.
However, the FTSE 100 Index struggled to make headway but remained above the psychologically important 7,000 mark, closing down 6.43 points to 7,020.47.
oliday Inn-owner Intercontinental Hotels Group (IHG) saw its shares slump after a slowdown in European and American bookings knocked revenue growth.
The company said revenue per available room, which is the sector’s preferred measure, grew 1.3 per cent in the third quarter, compared to 2.5 per cent over the previous quarter.
A number of IHG’s American hotels are concentrated in oil-producing markets, which have been impacted by the slide in oil prices.