UK shares were muted on Monday in a holiday-shortened week as markets digest recent gains on dovish pivots from major central banks, while Direct Line dropped as Belgian insurer Ageas abandoned its buyout plans for the firm.

The blue-chip FTSE 100 held firm at 7,931.67 points by 0850 GMT.

The mid-cap FTSE 250 was down 0.5%, led by a 12.6% slump in British home and motor insurer Direct Line as Belgian insurer Ageas SA said it did not intend to make further offers for it after two failed attempts.

The stock was set for its worst day in over a year, and dragged the non-life insurance sector down 1.7%.

UK stocks ended higher last week, with the FTSE 100 index notching its highest close in a year as investors cheered the Bank of England and the U.S. Federal Reserve signalling interest rate cuts this year.

Focus will now shift to the U.S. core personal consumption expenditure price index, the Fed's preferred inflation measure, due on Friday, to further gauge the trajectory of inflation and interest rates.

"The PCE report is going to take a little bit of a backseat given that we just had the Fed dot plot last week reiterating three cuts," said Ben Laidler, Global Markets Strategist at eToro, adding that it would likely be a "bit of a non-event" unless there's a "real outlier surprise".

Energy shares rose 0.6% as crude prices climbed on concerns over tighter global supply brought about by escalating conflicts in the Middle East and between Russia and Ukraine.

Among other stocks, Kingfisher slipped 2% as the home improvement retailer warned on the outlook, and said current-year profit would fall short of analysts' expectations.

Mobico slid 7.4% after the transport company tempered the lower end of its annual profit outlook range. (Reporting by Shristi Achar A and Pranav Kashyap in Bengaluru; Editing by Sherry Jacob-Phillips and Janane Venkatraman)