The slide in Astra's value to around £54 billion had a bearing on the FTSE 100 Index, which closed 11.3 points lower at 6844.6 during a disappointing session.
Sentiment was earlier hit by a lacklustre rise in Chinese house prices, which fuelled fears that the world's second largest economy will not be able to meet its 7.5 per cent annual growth target.
Stocks with exposure to the global economic recovery were derailed by the worries, with Rio Tinto off 61.5p at 3225p and BHP Billiton 11p lower at 1942p.
The pound was up against the dollar, despite warnings from the Bank of England Governor Mark Carney over the weekend that surging house prices posed the biggest risk to the UK economy. Sterling was up at 1.68 against the dollar and down to 1.22 against the euro.
The biggest faller in the top flight was AstraZeneca after the UK-based firm said the Viagra-maker's proposal on Sunday night undervalued it by £5bn, claiming the offer was motivated by tax-saving and cost-cutting.
Astra shares plunged 536p to 4287.5p, although chairman Leif Johansson admitted he had "no idea" whether the saga was over. If Pfizer walks away, it will not be able to return with a new offer for another six months.
Elsewhere, shares in Vodafone were lower for much of the session as AT&T's weekend deal to buy satellite broadcaster DirectTV appeared to reduce the chances of a bid from the US telecoms firm. Vodafone is due to publish its results today, with analysts forecasting a drop in annual profits to £12.9bn due to weakness in many of its key European markets. Shares recovered to finish unchanged at 217.15p.
Banking stocks also showed signs of weakness, with Barclays down 2.6p to 239p and Standard Chartered off 2.5p at 1333.5p. Among the top-flight risers, low-cost airline easyJet recovered from recent market uncertainty over summer bookings thanks to the help of rival Ryanair, which highlighted improved booking trends in the current half year.
The update from the Dublin-based carrier, which included a forecast for a 4 per cent rise in passenger numbers this year, boosted confidence in the airline sector.
British Airways owner International Airlines Group was 12.5p higher at 370.8p and easyJet lifted over 4 per cent to 1587p.Ryanair was over 10 per cent higher to 7.02 euro after its results, even though annual profits fell for the first time in five years.
The biggest risers on the FTSE 100 Index were easyJet up 71p at 1587p, International Airlines Group up 12.5p at 370.8p, Mondi up 28p at 1033p and Shire up 87p at 3353p.
The biggest fallers on the FTSE 100 were AstraZeneca down 536p at 4287.5p, Coca Cola down 35p at 1346p and Hargreaves Lansdown down 29p at 1144p.