By Sarah Turner

LONDON (Dow Jones)--Mineral extractors led British stocks to a lower close in London on Monday as investors fretted about whether equities can continue to advance from these levels.

The U.K. FTSE 100 index declined 0.75% to 4,405.22, giving back much of Friday's advance.

Rio Tinto shares fell 2.1% on Monday, while rival BHP Billiton (BHP) was also weak, down 3.5%.

Vedanta Resources shares fell 4.4% and Xstrata shares lost 1.6%.

Both firms rallied sharply on Friday, in part on Rio Tinto's decision to pull out of an investment deal with China and form an iron ore joint venture with BHP Billiton and in part on some better-than-expected U.S. payrolls data.

Still. Joshua Raymond, strategist at City Index, noted that payroll data wasn't enough to break the FTSE 100 out of its recent 200-point trading range.

He said this "indicates the anxiety investors are feeling as to whether the markets can maintain upward momentum at these levels."

The losses also came as the results from last week's European elections were tabulated.

"On average, equities do better before the election than after it, particularly so when there is a change of governing party," noted Gareth Williams, equity strategist at ING.

A broad move towards conservative parties was widely viewed as ratcheting up pressure on British Prime Minister Gordon Brown.

"Following Labour's resounding defeat in the European elections and the continuing uncertainty over Gordon Brown's future, sterling has slumped," said Mark O'Sullivan, director of dealing at Currencies Direct.

Sterling weakened 0.1% to $1.597 against the dollar.

Barclays falls

Barclays (BCS) shares declined 0.9%.

The lender said it has received other proposals for its iShares business and its broader BGI business. It has had discussions with a number of parties, including with BlackRock, about both iShares and BGI.

Lloyds Banking Group (LYG) shares dropped 7.9%..

The bank's shareholders have taken up 87% of the shares in its open offer. Lloyds will use proceeds of the offer, together with existing cash resources, to redeem preference shares held by the U.K. government.

Rolls Royce shares rose 2.1% after Goldman Sachs upgraded the aerospace firm to neutral from sell.

On the downside, the broker downgraded BAE Systems and Cobham to sell from neutral.

BAE Systems shares fell 1.7% and Cobham shares declined 3.4%.

Goldman Sachs said that companies with a significant exposure to the U.S. and U.K. defense hardware markets face a much tougher revenue outlook after 2011 as operations in Iraq and Afghanistan are reduced.

In the civil aerospace market, Goldman said 2011 should mark the bottom of the new aircraft delivery cycle.

Turning to deal news and BPP shares climbed 8.8% to 617 pence after Apollo Group said it's going to buy the firm for 303.5 million pounds ($540 million) in cash, or 620 pence a share.

Services Desk; Dow Jones Newswires; +44-20-7842-9319/9274

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