London shares opened broadly unchanged in their last trading session of 1998, as volume was thin and investors remained cautious ahead of the launch of the euro.

By 0932 GMT, the FTSE 100 index had dipped just 2.2 points to 5,939.3, while the March future contract was down 48 points at 5,941.0.

"There is so little genuine trade that the market will go where the most determined individuals want it to go," said one dealer.

Among corporate news, investors focused on a newspaper report which said British Aerospace had agreed to outline merger terms with Germany's Daimler Chrysler Aerospace AG (Dasa). BAe declined to comment while Dasa said the report was "speculation". BAe shares dipped 2-1/2p to 515-1/2p.