* FTSE 100 down 0.4 pct
* Fresnillo jumps pct on Goldman upgrade
* Smurfit Kappa rejects revised International Paper bid
* JD Sports rises on Finish Line takeover
* Speedy Hire jumps after results (Recasts, adds detail, closing prices)
By Helen Reid and Danilo Masoni
LONDON, March 26 (Reuters) - British shares fell on Monday, reversing earlier gains and joining a broader pull-back in Europe where diplomatic tensions with Russia helped more than offset easing trade war fears.
The FTSE 100 fell 0.4 percent to 6.888.7 points, its lowest closing level in 15 months and staying below the key 7,000 points mark for the third day running.
The index had earlier risen as much as 0.5 percent following a report that the U.S. has contacted China seeking measures to reduce their trade imbalance.
Then the United States said it would expel 60 Russian diplomats, joining governments across Europe punishing the Kremlin for a nerve agent attack on a former Russian spy in Britain that they have blamed on Moscow.
Strength in the pound, which rose against the dollar on growing confidence that the Bank of England would raise interest rates in May, also did not help.
Big international companies such as GlaxoSmithKline, Experian and BAT fell between 0.6 and 2.1 percent. Consumer staples and materials weighed the most, wiping off a combined 17 points from the index.
Top FTSE loser was Smurfit Kappa, which fell 4.1 percent after the firm spurned a renewed offer from International Paper.
Having jumped to a record high on news of the takeover approach early this month, Smurfit’s shares are now down more than 7 percent from that peak.
Fresnillo was the biggest gainer, up 4.5 percent after Goldman Sachs analysts upgraded the stock to “buy” and added it to their “conviction list”, based on their bullish position on gold.
“Our commodities team is bullish on gold for the first time in more than five years based on higher inflation, rising EM wealth and concerns about an equity correction,” wrote Goldman strategists, upgrading the whole gold mining sector.
Randgold Resources also gained 1.1 percent after the Goldman upgrade to “buy”.
Among mid-caps, JD Sports fell 4.7 percent after agreeing to buy Finish Line, one of the largest retailers of athletic footwear and apparel in the United States, for $558 million.
Inchcape rose 2.2 percent after saying it would buy Grupo Rudelman, an auto distribution business in Central America.
Dana Inc increased its cash offer for GKN by $140 million, ramping up its efforts to fend off rival suitor Melrose. GKN shares rose 0.6 percent.
Tools and equipment hire company Speedy Hire rose 8.1 percent after saying full-year profits were likely to be ahead of expectations.
Overall, analysts are downgrading their estimates for FTSE 100 earnings, and the leading UK index has underperformed European peers over the past 12 months.
Reporting by Helen Reid Editing by David Stamp and Andrew Heavens