London’s FTSE 100 Index sunk into the red as political unrest in Egypt hit sentiment and sent travel stocks lower.
The top flight mirrored falls across Europe due to fears the escalating tensions and protests could interrupt the flow of oil through the Suez Canal – a key route for tankers.
But the FTSE 100 pulled back from steep early session losses to stand 15.2 points down at 5866.2, with sentiment helped by futures trading suggesting America’s Dow Jones Industrial Average would shrug off the uncertainty.
A relatively robust earnings season so far on Wall Street is expected to offer support to US shares.
Other markets across Europe also remained in negative territory, with the Cac 40 in France down 0.3% and Germany’s Dax off 0.4%.
The price of Brent crude remained near 100 US dollars a barrel after spiking on Friday, while the US dollar strengthened as traders sought refuge in traditional safe haven currencies. Sterling fought back against the greenback, with the pound up 0.4% to 1.59 dollars.
Heavyweight banks such as Barclays and Royal Bank of Scotland were shaken by the uncertainty. Barclays was down 4.4p at 293.8p, a drop of more than 1%, while RBS fell 0.9p to 41.8p.
Commodity firms helped offset the falls as investors turned to less risky stocks, with BG Group up 36.5p to 1370.5p and Essar Energy rising 9p to 521.5p. Royal Dutch Shell added 8p to 2189p ahead of its full-year figures on Friday.
Retailers also featured on the risers board, led by supermarkets Sainsbury’s and Tesco with gains of 5.7p to 376.8p and 4.3p to 402.4p respectively.
Greene King topped the FTSE 250 Index risers board after it became the latest pubs group to reveal resilient trading over the festive period. The group, which saw shares rise 5% or 21.1p to 469.6p, forecast more profitable growth over the rest of the financial year and announced the £55.8 million acquisition of carvery pub restaurant business Cloverleaf.