Shares in CRH, one of the top gainers in the FTSE 100 index <.FTSE>, rose 7.2 percent after the company said it had agreed to pay 6.5 billion euros (5 billion pounds) for assets that Lafarge and Holcim need to sell to secure regulatory approval for their planned merger.

CRH, the leading producer of asphalt for road building in the United States, said the deal would expand its reach and make it the largest building supplier in central and eastern Europe.

"CRH has a history of acquisition and successfully integrating businesses into its operations. This deal will be large, adding 26 percent to our expected sales figure for 2014," Cantor Fitzgerald analyst Ian Osburn said.

The FTSE 100 index closed up 33.15 points, or 0.5 percent at 6,782.55 points, after closing 0.9 percent lower on Friday.

Budget airlines came under pressure after Ryanair, Europe's largest airline by passenger numbers, said profit growth would be modest next year as low oil prices helped rivals step up competition.

Ryanair fell 6.1 percent despite again raising its profit forecast. It said it would benefit only slightly from lower jet fuel costs this year because it has hedged 90 percent of its fuel needs at $92 per barrel up until March 2016.

While Ryanair is not a FTSE 100 member, airlines easyJet and IAG were the top fallers on the index, losing 6.4 percent and 2.8 percent respectively.

"Ryanair has always had particular difficulty hedging its oil. It's very difficult to hedge when you're not sure where the bottom is, but I think other airlines are in the same boat," said Brenda Kelly, chief market strategist at IG.

Oil volatility hit energy stocks again on Monday, with the sector <.FTNMX0530> up 3.3 percent, following an 8 percent jump in oil on Friday on a record weekly drop in U.S. oil drilling. They reversed an early fall to gain on Monday. [O/R]

Tullow Oil surged 9.3 percent, set for its biggest rise since 2011 to become the top FTSE 100 gainer, but remains down more than 50 percent since last June.

"The problems in the oil sector will stay for quite some time and we don't see a stabilisation in oil prices anytime soon. The rally that we are seeing in oil stocks today is an opportunity to reduce some exposure to the sector," said John Smith, senior fund manager at Brown Shipley.

Outside the blue chips, oil firm Afren closed nearly 90 percent higher in strong volume after lenders agreed to defer a $50 million amortisation payment by a month, saying that it would also delay the payment of a $15 million bond coupon by a month.

(Editing by Alison Williams)

By Atul Prakash and Alistair Smout