The FTSE 100 stood weaker in early action as nervous investors looked to assess weekend speculation that Greece may leave the euro and indications that the European Central Bank (ECB) could soon start quantitative easing.
In early action, the FTSE 100 was off 29.63 points or 0.45% at 6,518.17.
Speculation over a 'Grexit' was triggered by a report from Germany's Der Spiegel magazine on Saturday which said the German government sees a Greek departure from the euro as almost unavoidable, if the Syriza party wins the upcoming Greek election.
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Meanwhile, comments from ECB president Mario Draghi that the Bank may act to stimulate the eurozone economy led to the single currency touching a nine-year low versus the dollar early this morning. The euro fell by 1.2% against the dollar to $1.1864, marking its weakest level since March 2006, before recovering slightly to $1.19370.
Michael Hewson, chief market analyst at CMC Markets, says the performance of markets going forward will depend on how accommodating central banks continue to be over 2015, as well as how much of a boost the recent slide in oil prices gives to economies.
He says: "As far as central banks are concerned, looking back at market expectations for last year it is surprising at how little the narrative has changed. This time last year investors were speculating about when to expect further easing from the ECB, as well as hanging on every word uttered by the ECB President against a backdrop of weakening economic data and concerns about deflation."
The main difference now versus last year, Hewson says, is that most of the speculation as the new year kicks off is about when the ECB might actually begin its long anticipated sovereign bond-buying programme.
He adds: "Throw in the prospect of renewed concerns about a Greek exit to the euro area and we could well be all the way back in 2012, when there was the very real prospect that Greece would be allowed to leave the euro.
"Back in 2012 the prospect of such a scenario playing out had the euro in freefall until Draghi uttered those immortal words that the ECB would do what it takes to preserve the euro and 'believe me it will be enough'.
"Fast forward to 2015 and it would appear that investors, as well as politicians, appear to be much more sanguine about the prospect of this playing out."
Hewson believes a Grexit would open up the very real prospect of further departures on the basis of precedent, particularly if the country in question were to flourish outside the euro.
He notes, however, that a Grexit scenario is still being treated as an outlier by markets for the moment, with investors gearing up for some further easing measures to be announced at this month's ECB meeting on 22 January.
"Even allowing for Draghi's comments, and the fact that bond market yields have continued to plunge, the prospect of an announcement by the ECB of a bond buying plan at this month's meeting would seem premature given that the Greek election takes place just three days later."
On the corporate front, the retail sector was in focus this morning after department store chain John Lewis revealed it enjoyed the most lucrative week ever thanks to Black Friday, which helped to drive sales nearly 5%higher in the five weeks to 27 December.
John Lewis added however that late November discounting due to Black Friday was disrupting traditional Christmas trading patterns and may have to be tempered. Andy Street, John Lewis Managing director, told the BBC: "We've got to ask if it's right to concentrate trade so much in that one period. "
Elsewhere, oil giant BP saw its shares fall 11.55p or 2.8% to 398.9p on an FT report that it stands to lose hundreds of million of dollars in earnings and dividend income linked to its stake in Russian oil company Rosneftbecause of the slide in oil prices and a slide in the rouble's value.
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