LONDON: The British pound fell on Monday but held close to multi-month highs, as more Brexit uncertainty surfaced over the weekend.
Sterling's drop helped to push up London's stock market that features numerous multinationals earnings in other currencies, while eurozone equity indices were little changed from Friday's close.
"Thanks to the pound's shaky start, the FTSE was able to continue its recent rally", noted Connor Campbell, analyst at Spreadex trading group.
British leader Theresa May's government on Sunday warned that it may not hold a planned Brexit vote this week unless it feels it can secure a win that avoids a lengthy delay to pulling out of the EU.
The pound rallied last week, illustrating markets' surprising confidence of there being an eventual smooth EU exit for Britain despite political unrest over sealing the country's divorce.
But weekend developments once more triggered worries about a chaotic no-deal departure occurring instead.
Elsewhere on Monday, Asian stock markets closed higher as investors tracked Friday's positive lead from Wall Street on optimism over China-US trade talks, while attention turns to a Federal Reserve policy meeting this week.
"The signing of a trade deal between the US and China would eliminate one major headwind for global markets and is currently the more probable outcome," said James Hughes, chief market analyst at AxiTrader.
"There is more of an incentive for both superpowers to make a deal because it is economically in their best interests. This is especially the case given the growing US trade deficit due to falling exports to China."
The Fed's upcoming meeting will meanwhile be closely followed for clues on the outlook for US interest rates, with some observers suggesting that the central bank would pare its pace of hikes in the face of a slowing global economy.
On the corporate front Monday, share prices in Deutsche Bank and Commerzbank rallied after Germany's two biggest lenders on Sunday said they planned formal talks over a possible merger.
The banks, both grappling with painful restructurings after years of falling profits, have long been the subject of merger rumours.
In Frankfurt mid-afternoon, Deutsche Bank's share price jumped 4.4 percent to 8.16 euros and Commerzbank soared 6.8 percent to 7.64 euros.
- Key figures around 1145 GMT -
Pound/dollar: DOWN at $1.3266 from $1.3286 at 2100 GMT Friday
Euro/pound: UP at 85.60 pence from 85.21 pence
Euro/dollar: UP at $1.1358 from $1.1325
Dollar/yen: DOWN at 111.47 yen from 111.51 yen
London - FTSE 100: UP 0.7 percent at 7,276.57 points
Frankfurt - DAX 30: DOWN 0.2 percent at 11,667.33
Paris - CAC 40: UP 0.1 percent at 5,409.27
EURO STOXX 50: FLAT at 3,385.47
Tokyo - Nikkei 225: UP 0.6 percent at 21,584.50 (close)
Hong Kong - Hang Seng: UP 1.4 percent at 29,409.01 (close)
Shanghai - Composite: UP 2.5 percent at 3,096.42 (close)
New York - DOW: UP 0.5 percent at 25,848.87 (close)
Oil - Brent Crude: UP six cents at $67.22 per barrel
Oil - West Texas Intermediate: DOWN eight cents at $58.44 per barrel