Stock prices in London closed mostly lower on Monday, as markets mainly price in an interest rate cut from the US Federal Reserve, and a hold from the Bank of England, this week.

"A 25bp (US rate) cut is almost fully priced in, with three cuts for the year largely anticipated," Pepperstone's Dilin Wu said.

"Against this backdrop, the 10-year US Treasury yield briefly fell below 4%, marking a five-month low."

The yield on the US 10-year Treasury was quoted at 4.04%, narrowing from 4.08%. The yield on the US 30-year Treasury was quoted at 4.65%, narrowing from 4.70%.

The FTSE 100 index closed down 6.26 points, 0.1%, at 9,277.03. The FTSE 250 ended up 21.19 points, 0.1%, at 21,621.87, and the AIM All-Share closed down 1.05 points, 0.1%, at 767.39.

J Sainsbury shares on the FTSE 100 ended 3.5% higher.

The supermarket chain rebuffed an approach from JD.com Inc to buy Argos, but analysts say that the fact it did not rule out a sale of the retailer suggests it may be open to more offers.

"The firing gun has effectively been triggered on the sale of Argos," AJ Bell analyst Danni Hewson said.

"Sainsbury's might have rejected an offer from Chinese retailer JD, but the fact it hasn't come out and said the business isn't for sale at any price is telling."

Meanwhile, Shore Capital Markets analysts said they could "see why (Sainsbury) may engage with a firm like JD.com, which is a multi-functional international entity embracing retail, logistics, real estate, and healthcare.

"That said, to us Sainsbury is absolutely right to walk away from a potential deal that is not in the best interests of all of its stakeholders."

On the FTSE 250, AO World closed up 14%.

The Bolton, England-based firm said it expects full-year profit at the top half of its target range, as it "continues to perform strongly".

For the six months ending September 30, AO World expects revenue 13% ahead of the previous year. Revenue in its B2C division is expected to rise by 11% on-year. The firm also backed its full-year outlook for B2C growth in the double-digits, but raised its minimum profit target, now expecting pre-tax profit between £45 million and £50 million. Also, AO World said it will launch its first-ever buyback worth up to £10 million.

"Like an ageing fridge freezer, AO has made a lot of noise during its time on the stock market without performing that well," AJ Bell's Russ Mould said.

"However, the online white goods seller is providing investors with cause for optimism in its latest update... The decision to unveil a share buyback speaks to management's confidence in the outlook and the company's strong financial position."

Pinewood Technologies ended up 0.5%.

The Birmingham-based, automotive sector-focused software provider is joining the FTSE 250, effective from Tuesday.

On AIM, Ingenta finished 15% higher.

The provider of software and services to the publishing industry said revenue in the six months to June 30 rose 1.6% on-year to £5.2 million from £5.1 million. Its pre-tax profit jumped 96% to £1.2 million, and Ingenta increased its dividend by 17% to 1.75 pence.

Litigation Capital Management lost 17%, after ending its investment in a class action brought on behalf of commercial fishermen against Gladstone Ports Corp.

The dispute financing solutions-focused asset manager said it believes the claimants' initial solicitors overcharged for legal services. It is seeking reimbursement and is investigating a claim for breach of contract and negligence.

The company also announced a formal strategic review.

In European equities on Monday, the CAC 40 in Paris closed up 0.9%, while the DAX 40 in Frankfurt ended up 0.2%.

The pound was quoted higher at 1.3597 US dollars at the time of the London equities close on Monday, compared to 1.3551 dollars on Friday. The euro stood at 1.1765 dollars, higher against 1.1719 dollars. Against the yen, the dollar was trading lower at 147.34 yen compared to 147.83 yen.

Stocks in New York were mostly higher. The Dow Jones Industrial Average was down 0.41 points, the S&P 500 index up 0.5%, and the Nasdaq Composite up 0.9%.

"Most of the recent progress made by US stocks has been founded on an expectation that a US rate cut is coming on Wednesday, but UK rates are expected to remain unchanged," Mould said.

"Expectations for a US rate cut have been heavily influenced by the Fed's messaging. The big unknown is whether this will be a standard cut or a bumper one.

"The other big draw this week is likely to be Trump's state visit to the UK, which has already been heralded by news of tie-ups between companies on both sides of the Atlantic."

Meanwhile, the US has announced a "framework" deal with China to resolve their dispute over TikTok that calls for the Chinese-owned app to pass to US-controlled ownership.

"We have a framework for a TikTok deal," US treasury secretary Scott Bessent told reporters, adding it calls for the app "to switch to US-controlled ownership".

"It's between two private parties, but the commercial terms have been agreed upon," he said.

Mr Bessent declined to give further details, saying US president Donald Trump and Chinese president Xi Jinping will speak on Friday to "complete" the agreement.

Tesla climbed 6.5%.

Chief executive Elon Musk bought about one billion dollars worth of shares in the car company, according to a regulatory filing with the Securities & Exchange Commission.

The purchase came the same month Tesla unveiled a proposed compensation package for Mr Musk that could top one trillion dollars, if he delivers on his vision for stratospheric growth from new technologies.

Brent oil was quoted at 67.37 dollars a barrel at the time of the London equities close on Monday, down from 67.52 dollars late on Friday.

Gold was quoted at 3,668.27 dollars an ounce, higher against 3,644.61 dollars.

The biggest risers on the FTSE 100 were Centrica, up 6.55p at 166.90p, J Sainsbury, up 10.60p at 317.80p, Segro, up 19.10p at 629.10p, Endeavour Mining, up 76.00p at 2,894.00p, and Marks & Spencer, up 9.00p at 347.20p.

The biggest fallers on the FTSE 100 were AstraZeneca, down 380.00p at 11,414.00p, Airtel Africa, down 4.60p at 223.80p, BT Group, down 3.90p at 201.90p, GSK, down 24.50p at 1,479.00p, and ConvaTec, down 3.80p at 232.20p.

On Tuesday's economic calendar, highlights include UK unemployment, and US retail sales and industrial production.

On Tuesday's UK corporate calendar, City Of London Investment Trust and Kier Group report full-year results.

FTSE 100 red ahead of expected US rate cut