FTSE 100 dips as AstraZeneca slides on Bristol Myers tie-up talks

Aug 3 (Reuters) - The UK's FTSE 100 edged lower on Monday, as a fall in AstraZeneca shares after reports of a potential tie-up with U.S. drugmaker Bristol Myers Squibb overshadowed improving sentiment from lower oil prices.

The blue-chip FTSE 100 index ended down 0.1% to 10,857.7 points, dropping for the third straight day. The mid-cap FTSE 250 rose nearly 1% to 24,224.77 points.

• AstraZeneca shares fell 8.9% as investors punished the drugmaker over reports of merger talks with Bristol Myers Squibb about forming one of the world's biggest drugmakers worth nearly $400 billion. The stock was the top decliner in the FTSE 100.

• "The initial market reaction to the reports is highly circumspect, reflecting understandable caution about the scale of the deal. Major transactions of this kind often run into difficulties around integration and matching up different workplace cultures," Russ Mould, investment director at AJ Bell, said.

• The broader British stock market and global stocks took some comfort from a sharp fall in oil prices after U.S. President Donald Trump said he held off a fresh attack on Iran as he sought a quick deal to reopen the Strait of Hormuz. [O/R]

• Rate-sensitive housebuilding stocks climbed as UK bond yields fell on the back of the retreat in oil prices. Vistry Group jumped nearly 8%, while Bellway and Persimmon climbed 2.8% and 2.1%, respectively.

• British manufacturing activity expanded for a ninth straight month in July but at the slowest pace in four months, according to S&P Global purchasing managers' data that pointed to a renewed impact from the Iran war towards the end of last month.

• Among other movers, UK shipping services firm Clarkson rose 8.9%, leading gains across all London-listed stocks, after issuing an upbeat full-year outlook.

(Reporting by Sruthi Shankar in Bengaluru ; Editing by Nivedita Bhattacharjee and Andrew Heavens)