UK's FTSE 100 dips as NatWest slides on Evelyn deal

Feb 9 (Reuters) - The FTSE 100 dipped on Monday, as investors focussed on the brewing political crisis in Britain, while bank stocks came under pressure with NatWest leading declines after it agreed to buy wealth manager Evelyn Partners.

The blue-chip FTSE 100 .FTSE fell 0.13% as of 1105 GMT, easing from record highs touched last week. The FTSE 250 midcap index .FTMC was little changed.

British Prime Minister Keir Starmer's chief of staff, Morgan McSweeney, quit on Sunday, saying he took responsibility for advising Starmer to name Peter Mandelson as ambassador to the U.S. despite his known links to sex offender Jeffrey Epstein.

Polls show Starmer is hugely unpopular with voters after a series of embarrassing U-turns, prompting some in his own party to openly question his judgment and his future. Longer-dated borrowing costs have risen in recent days, suggesting traders think Starmer may be forced out.

"Political pressure is building on Starmer to resign. If we do get shift in the premiership, the replacement is likely to be from the pro Left camp which would weigh on the currency and long-term bond yields," said Jefferies economist Mohit Kumar.

Weighing on the FTSE 100, NatWest Group NWG.L slid 5.5% after it agreed to buy one of Britain's largest wealth managers, Evelyn Partners, for 2.7 billion pounds ($3.68 billion) including debt.

UK banks .FTNMX301010 overall fell 1.2% as investors priced in more rate cuts from the British central bank.

The Bank of England kept interest rates on hold last week, but only after an unexpectedly narrow 5-4 vote, and said borrowing costs are likely to fall if inflation continues to ease.

Data this week, including January retail sales and December GDP figures, could further guide expectations around monetary policy.

Among other stocks, Greggs GRG.L fell 5% after Jefferies warned that weight-loss drugs could curb sales growth by reducing demand from the bakery chain's customers.

Plus500 PLUSP.L rose 5.4% to touch a record high after the online trading platform forecast 2026 results ahead of market expectations.

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