UK shares flat as Israel-Iran conflict rages on, dealmaking in focus

June 23 (Reuters) - UK shares started the week on a lacklustre note as investors looked for any signs of escalation in the ongoing Middle East conflict, while instruments maker Spectris surged after agreeing to a takeover deal by private equity firm Advent.

The internationally exposed FTSE 100 index .FTSE and the domestically focussed midcap index .FTMC were both flat on Monday by 1010 GMT.

Investors braced for Iran's response to U.S. airstrikes on some of the country's nuclear facilities over the weekend, as they grappled with the likelihood of geopolitical tensions intensifying in a region that is crucial to global oil supply - particularly the Strait of Hormuz.

Oil and gas .FTNMX601010 led sectoral gains, tracking crude prices that were close to five-month highs. Energy giants BP BP.L and Shell SHEL.L were up about 1% each, while Harbour Energy HBR.L gained 2%.

Airline stocks including Easyjet EZJ.L, Wizz Air WIZZ. and British Airways parent International Consolidated Airlines ICAG.L dropped between 1.1% and 2.3%, hurt by higher crude prices.

Markets also kept their focus on the latest set of mergers and acquisitions in the UK, with Spectris' SXS.L takeover marking the biggest acquisition in Britain this year.

Spectris' SXS.L shares jumped 15.3% and hit a sixteen-month high after the company agreed to a 4.4-billion-pound ($5.9 billion) debt-inclusive takeover deal by private equity firm Advent over a rival proposal from KKR KKR.N.

Primary Health Properties' PHP.L shares dropped 3.8% and weighed on the broader real estate .FTNMX351020 sector after Assura AGRP.L backed a 1.78-billion-pound ($2.4 billion) takeover deal by its rival.

Shares of Assura were marginally higher in early trading, building on a nearly 30% rise this year.

Meanwhile, economic data showed that British business activity slightly grew in June, but worries remained with the conflict in the Middle East.

Across the Atlantic, Federal Reserve Chair Jerome Powell is set to face Congress on Tuesday and Wednesday. Traders will keep a keen eye on his outlook for the economy and interest rates.

 For related prices, Reuters users may click on -  UK stock report     .L     FTSE index:         0#.FTS6  techMARK 100 index: .FTT1X         FTSE futures:     0#FFI:  Gilt futures:       0#FLG:         Smallcap index:    .FTSC  FTSE 250 index:     .FTMC          FTSE 350 index:    .FTLC  Market digest:      .AD.L          Top 10 by vol:     .AV.L  Top price gainers:  .NG.L          Top % gainers:     .PG.L  Top price losers:   .NL.L          Top % losers:      .PL.L 
     For related news, click on - UK hot stocks:      HOT and GB     Wall Street:          .N Gilts report:       GB/            Euro bond report GVD/EUR Pan European stock report: .EU Tokyo stocks:       .T             HK stocks:           .HK Sterling report:    GBP/           Dollar report:      USD/
     For company prices, click on - Company directory:  UKEQ          By sector:          FTAX 
     For pan-European market data, click on - European Equities speed guide................ EUR/EQUITY  FTSE Eurotop 300 index........................... .FTEU3  DJ STOXX index................................... .STOXX  Top 10 STOXX sectors........................ .PGL.STOXXS  Top 10 EUROSTOXX sectors................... .PGL.STOXXES  Top 10 Eurotop 300 sectors.................. .PGL.FTEU3S  Top 25 European pct gainers.................... .PG.PEUR  Top 25 European pct losers..................... .PL.PEUR