* FTSE 100 down 0.6 pct
* AstraZeneca dives after rejecting Pfizer offer
* EasyJet buoyed by Ryanair results
By Tricia Wright and Alistair Smout
LONDON, May 19 (Reuters) - Britain's top shares fell on Monday, pressured by a sharp drop in pharmaceutical firm AstraZeneca after it rejected rival Pfizer's higher takeover bid.
AstraZeneca dived 12.9 percent after turning down Pfizer's 55 pounds/share take-it-or-leave-it offer.
That steep decline accounted for around three quarters of the fall on the FTSE 100 index, down 41.38 points, or 0.6 percent, at 6,814.43 points by 1008 GMT.
AstraZeneca had risen over 27 percent in the month since the first Pfizer bid was reported, and traders said that a deal was now unlikely, with Pfizer reluctant to engage in a hostile approach.
"With Pfizer saying they won't go hostile, it looks like it is pretty much dead," Will Hedden, sales trader at IG, said.
"The rhetoric from certain government sections about securing jobs in the UK will have been a hurdle and certainly put off AstraZeneca shareholders."
Recent price moves have left AstraZeneca trading at a forward price/EPS multiple of 19.5, according to StarMine data, compared to 15.5 for GlaxoSmithKline and 14.3 for Sanofi , and over double its 10-year median of 9.3.
The FTSE 100 retraced the previous week's 0.6 percent gain, which saw the index touch 14-year highs. On Thursday it came within 0.8 percent of all-time highs set in December 1999.
"With the FTSE 100 close to all-time-high territory, concerns have once again been raised in relation to valuation, which is creating something of a headwind," said Jeremy Batstone-Carr, analyst at Charles Stanley.
In common with AstraZeneca, the broader market is also trading above long-run average valuations. The FTSE 100 trades at a price to earnings ratio of 13.8, compared to a 10-year average of 11.8, Thomson Reuters Datastream showed.
EasyJet was among the top risers after expectation-beating results from Irish peer Ryanair.
EasyJet had succumbed to profit taking in recent sessions - down 10 percent last week - as investors cashed in profits on a powerful rally seen over the last 12 months. Its shares rose 1.3 percent on Monday. (Editing by Toby Chopra)