LONDON -- There was not too much to talk about in a dull market on a dull summer's day in London. Activity was, like the weather, a bit of a damp squib. The

FTSE 100

ended the session down 31.30 points, or 0.48%, at 6,466.20.

The mood was set by this morning's release of higher-than-expected June U.K. producer price data. Input prices climbed 1.4% on the month, exceeding the consensus forecast for a 0.9% increase. The figures helped to stop the market from following Friday's solid gains in New York, and served as a reminder that we may not have seen the last in the current cycle of rate rises. Thus many market players decided that the best course of action was to spend another day sitting on the sidelines.

U.K. tech giant

Bookham Technology

(BKHM)

was the main index's star performer, rising a hefty 10% to

46.60 ($70.53). The catalyst for the rally was a merger between

JDS Uniphase

and

SDL

, two fiber-optic providers from across the pond. This was seen as generally positive for optical component technology companies and Bookham benefited from its dual listing on the

Nasdaq

.

However, both companies looked like laggards in comparison to AIM-listed

Independent Energy Holdings

(INDYY)

. Shares played catch up following a huge rise in the company's New York American Depositary Shares after London had closed following market speculation about an imminent takeover.

Sir Richard Branson's

Virgin Group

is the name in the frame, and Independent Energy rose by over 31% to 660p.

Banks had a mixed session, with both

HSBC

(HBC)

and

Standard Chartered

, posting decent gains, gaining 18.5p to 767p and 33p to 888p respectively. Trading in HSBC took its cue from a strong rise of the company's stock in Hong Kong following the rehashing of an old story that it is considering a merger with US giant

Merrill Lynch

.

However, traders said these gains masked the woes of what has been a weak sector for several months now.

Lloyds TSB

(LLDTY)

took another pasting, falling 25.5p to 584p. Further illustrating the malaise,

Halifax

failed to hold its early gains and slipped back from an intraday high of 585p to finish 1.5p lower at 565p.

Barclays

(BCS) - Get Report

also had a bad day losing 8p to

14.82.

The pharmaceutical sector also came under pressure, with

Glaxo Wellcome

(GLX)

off by 22p to

19.42 and merger

SmithKline Beecham

(SBH) - Get Report

also down 20p to 875p.

The volatility in FTSE 100 heavyweight

Vodafone AirTouch

(VOD) - Get Report

continued. Today the stock headed south, closing down 5.75p at 314.25p. The short-lived relief rally, based on the belief that the major mobile telecom companies will club together to put one over European governments in their auction of the third generation mobile phone licenses, appears to have faded already. The stock was hardly helped by news that the

National Association of Pension Funds

is advising Vodafone investors to abstain from voting on the company's remuneration policy later this month. The disquiet stems from a proposed

10 million bonus for the company's chief executive Chris Gent following the successful takeover of German rival

Mannesman

.

The technology sector also had a lackluster session, with the

Techmark

index of leading technology shares shedding 41.88 points to 3,404.75. Among the big losers was

Pace Micro Technology

, which fell 78.5p to 893p. This drop came despite strong profit and revenue growth for its latest fiscal year. However, fears about a potential margin squeezes saw the stock pressured and rumors of director share sales did little to help sentiment.

Most of Europe's other major stock markets closed lower Monday, with the

CAC 40

in Paris ending down 78.6, or 1.2%, at 6,487.4. Late in the German trading day the

Xetra Dax

in Frankfurt was down 6.1, or 0.1%, at 7,046.1 and the Neuer Markt's tech-heavy

Nemax 50

index was down 79.1, or 1.3%, at 6,051.6.

The debut of aerospace giant

EADS

on the bourses in Frankfurt, Paris and Madrid was less than spectacular. The company's shares in Paris ended at 17.50 euros ($16.58), down from the opening price of 19.

Blue-chip German tech shares were mixed, with software maker

SAP

(SAP) - Get Report

near unchanged at 195.80,

Infineon

(IFX)

0.60 euro lower, or 0.8%, at 76.75 and

Siemens

(SMWAY)

was up 1.60 euros, or 1%, at 164.10.

Major European telcos were also mixed, as

Deutsche Telekom

(DT) - Get Report

climbed 0.21 euros, or 0.3%, to 61.35,

Telefonica

(TEF) - Get Report

ended down 0.23 euros, or 0.9%, to 24.51 and

France Telecom

(FTE)

closed unchanged at 151.00, despite news the company's hold on local calls in France may soon come to an end.

Elsewhere in Paris,

Vivendi

(VVDIY)

ended down 0.05 euros, or 0.1%, at 90.00,

Total Fina Elf

(TOT) - Get Report

closed 1.50 higher, or 0.9%, at 162.00 and

Alcatel

(ALA)

closed flat at 74.40 euros.