The FTSE 100 gave up opening gains to stand firmly in negative territory, with Royal Bank of Scotland sliding in early action.
Having kicked off 40 points higher, the FTSE 100 soon beat a hefty retreat. Just before 10AM it stood 43.8 lower, or 0.67%, at 6522.29.
Royal Bank of Scotland shares were under pressure following a report in The Times that the bank may be fined more than £5bn over its involvement in the sale of toxic mortgage-backed debt in the US. According to the newspaper, RBS has earmarked £1.9bn for a settlement. RBS shares were down 1.7%, or 6.8p, to 388.6 in early trading.
Shares in BG Group edged up 3.5p to 868.5 after it announced that the Egyptian government has made a payment of $350m as part of the country’s aim to repay outstanding debts to the energy sector. BG is still owed a further $920m, and assured investors it is working with Cairo on its recovery.
In the small-caps market, Quindell shares jumped 16%, or 6.4p, to 45.89p after it announced it has entered into “exclusivity arrangements” with a third party on 31 December 2014 with a view to disposing of one of its operating divisions.
During 2014, Quindell shares lost more than 90% of their value following an attack on the company’s acquisitions, cash flow and profitability by US-based short seller Gotham City Research.
On the currencies front, the euro was in sharp focus as it kicked off the new year at 29-month lows of $1.2050, skirting with levels last seen mid-2012. The fresh retreat by the single currency came after European Central Bank head Mario Draghi said the central bank stood ready to respond to the risk of deflation.
As the euro plummeted, the dollar hit a near nine-year peak against a basket of major currencies, and bounded ahead to ¥120.45.