Energy shares clip UK FTSE's wings, offset M&A boost

* FTSE 100 flat at 6,804 pts

* Energy shares weigh as Chinese data hits oil price

* Drinks firms boosted by M&A expectations; SAB rallies

By Francesco Canepa

LONDON, Sept 15 (Reuters) - Energy shares capped Britain's top share index on Monday, hit by the combination of slowing economic growth in China, the world's top energy consumer, and new sanctions against Russia.

They offset a boost from mergers & acquisitions speculation in the beverages sector, which saw shares in SABMiller up 9.8 percent on the back of a report about takeover interest from larger rival Anheuser-Busch InBev.

Energy firm BG was the biggest drag on the FTSE 100 , with peers BP and Royal Dutch Shell (LSE: RDSA.L - news) not far behind, as Brent crude slumped to its lowest in more than two years, below $97 per barrel.

The fall came after lacklustre economic data from China cast a shadow over the outlook for oil demand at a time of abundant supply, threatening the profits of companies which make money selling oil and gas.

"Most of the big oil companies have their strategic targets based around $100 a barrel so we're still in that ballpark but it's all dependent on the duration (of the current oil price weakness)," said Investec (LSE: INVP.L - news) energy analyst Neill Morton.

"Psychologically, as far as the market is concerned, $99 can be closer to $90 than to $100."

Adding to a gloomy sentiment on the sector, the United States banned Western firms from supporting the activities of a number of Russian companies in oil exploration or production from deep water, Arctic offshore or shale projects.

Energy shares shaved 5 points off the FTSE, which closed 2.75 points lower at 6,804.21 points, off its intra-day low but still extending its retreat from this month's 14-year high.

Bill McNamara, technical analyst at Charles Stanley (LSE: CAY.L - news) , saw 6,756 - the FTSE 100's 50-day moving average and the level at which it will have retraced 38.2 percent of its recent advance - as a short-term support level.

M&A BRIGHTENS MOOD

Brightening an otherwise gloomy market -- hit too by concerns about the Scottish referendum and the prospect of a tightening of U.S. monetary policy -- were signs of deal activity.

SAB Miller hit an all-time high in volume nearly eight times its average for the past three months after a report in the Wall Street Journal said that AB Inbev was talking to banks about financing a possible $122 billion takeover bid.

Dutch brewer Heineken (Other OTC: HEINY - news) said on Sunday it was approached by SABMiller (LSE: SAB.L - news) about a potential takeover, but that its controlling shareholder intended to keep the company independent.

"There's obviously going to be further consolidation in there ... I think the whole of the beverage sector will be a good bet," said Joe Rundle, head of trading at ETX Capital.

Tour operator TUI Travel (LSE: TT.L - news) and majority owner TUI AG (Xetra: TUAG00 - news) meanwhile agreed the terms of a merger creating the world's largest leisure and tourism group with a combined value of 6.5 billion euros. TUI Travel rose 1.6 percent. (Additional reporting by Tricia Wright; Editing by Crispian Balmer)