* FTSE 100 down 0.3 percent to one-week closing low
* Smiths, S&N lifted by M&A hopes
* BP makes modest gains on Rosneft deal
By Tricia Wright
LONDON, Jan 17 (Reuters) - Britain's top share index fell on Monday, with declines from miners and banks offsetting a lift from merger and acquisition moves, as finance ministers were gathering to discuss changes to the euro zone's rescue fund.
Smiths grabbed top spot on the blue-chip leaderboard, up 7.7 percent, after the engineering firm rebuffed a 2.45 billion pounds ($3.88 billion) bid for its medical unit.
Artificial knee and hip maker Smith & Nephew rose 3.5 percent following a weekend report Johnson & Johnson was considering a fresh takeover approach worth at least 800 pence a share, valuing it at 7.1 billion pounds.
The FTSE 100 ended down 16.37 points, or 0.3 percent, at 5,985.70, its lowest close since Jan. 10 and a third session of losses. Trading was lacklustre with U.S. markets closed for the Martin Luther King Jr Holiday.
"It's a pretty quiet day with regards to news on a general equity basis ... I think we're waiting to see how the European finance ministers' meeting goes, and we'll take it from there," Peter Dixon, economist at Commerzbank, said.
Euro zone finance ministers are meeting to discuss changes to the effective lending capacity of the European Financial Stability Facility, though no final decision was expected on Monday, with Germany seeing no need to bolster the fund.
BP BOOST
BP edged up 0.2 percent, outperforming sector peers, as investors and analysts gave a cautious welcome to its share swap and Arctic exploration deal with Russia's Rosneft, saying any return is likely a long way off.
Vodafone Group added 1.8 percent as investors awaited a deal for the British mobile operator to dispose of its 44 percent stake in French mobile operator SFR for between 7 billion euros ($9.32 billion) and 8 billion.
Banks fell as investors locked in profits from a sector that has enjoyed a good start to 2011 despite Europe's sovereign debt problems lingering in the background.
Miners remained hamstrung by concerns over demand from China after the world's biggest consumer of raw materials announced it was raising banks' required reserves by another 50 basis points on Friday, a further sign of monetary policy tightening.
ARM Holdings fell 3 percent, with traders citing concerns surrounding customer Apple's Chief Executive Steve Jobs. He is taking medical leave two years after a six-month break for a liver transplant.
Autonomy shed 5.1 percent, the worst performing FTSE 100 stock, after Standard and Poor's equity research said a lack of a positive pre-announcement does not bode well for the British software firm's Q4 results.
Engineer Weir Group shed 2.8 percent, with traders citing talk of a potential bid for Swiss rival Sulzer.
($1=.7512 Euro)
($1=.6307 Pound)
(Editing by David Hulmes)