* FTSE 100 edges up 0.1 percent
* Unilever slumps as Kraft withdraws offer
* RBS up on alternative plan to Williams & Glyn sale
* Hammerson gains after results
* Pearson hit by broker target price cut (ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)
By Atul Prakash and Helen Reid
LONDON, Feb 20 (Reuters) - Britain's top share index steadied after hitting a new one-month high on Monday, with a slump in Unilever after Kraft ditched its bid offset by stronger firms like Royal Bank of Scotland and Rolls Royce.
Unilever shares tumbled nearly 7 percent and were on track for their biggest one-day fall since 2008 after U.S. food giant Kraft Heinz withdrew its proposal for a $143-billion merger with its larger rival.
Kraft had made a surprise offer for Unilever to build a global consumer goods behemoth that was flatly rejected on Friday by Unilever, the maker of Lipton tea and Dove soap.
"What exactly happened in this whirlwind of a story is yet to be fully revealed, but it looks like Unilever isn’t just playing hard to get," said George Salmon, equity analyst at Hargreaves Lansdown.
"It was always going to be a difficult pitch to convince shareholders to relinquish their grip on Unilever, given the expectations for the company to keep churning out resilient growth in the years to come."
Pearson also lost ground, with its shares falling 3.9 percent after Berenberg sharply cut its target price for the stock to 400 pence from 500 pence, saying it did not see a short-term fix for the company amid serious structural and cyclical issues at the key higher education courseware division.
The blue-chip FTSE 100 index was flat in percentage terms at 7,299.86 points after climbing to an intra-day high of 7,329.56, the highest level since the middle of January.
The broader index stayed steady despite sharp falls in shares of companies like Unilever and Pearson as some other firms made strong gains.
Royal Bank of Scotland shares rose 6 percent, the top gainers in the FTSE 100 index, as the lender said late on Friday that it had proposed abandoning the disposal of its Williams & Glyn business after a seven-year struggle to sell the unit to meet European Union state aid demands.
"On the face of it, removing this uncertainty would seem like good news for RBS investors, reflecting the fact that executing a disposal of Williams & Glyn was a key hurdle that the group needed to overcome before it could recommence paying dividends," Shore Capital analyst Gary Greenwood said.
Rolls Royce gained 6.3 percent after Goldman Sachs added the stock to its "Conviction List" and upgraded its rating on the aero-engine maker to "buy" from "neutral", saying that its earnings performance was expected to improve.
Hammerson, which owns and manages shopping centres, was among top gainers, up 4.3 percent after it posted an increase in net asset value per share and said its premium retail outlets continued to outperform.
Liberum analysts, who give Hammerson a 'hold' rating, said: "Hammerson is the only European REIT to offer exposure to faster growing premium outlets," adding that they remain cautious on the sustainability of rental growth due to weaker consumer confidence.
British builder Bovis Homes slumped 10.2 percent, the biggest faller in the FTSE 250, after the company said profit would drop again this year as it builds fewer homes and focuses on improving quality.
Small-cap support services and construction company Interserve plummeted 32.1 percent, its worst daily loss since 2002, after it doubled the charge for getting out of its energy-from-waste business.
Reporting by Atul Prakash; Editing by Janet Lawrence