While the new currency appeared to start its life fairly strongly, dealers were cautiously awaiting further indications of the euro's long term strength.

Stock markets in the 11 Euroland countries gained strongly, spurred by the rising value of the euro and expectations that international investors will be keen to increase their European investments under a single currency.

But the FTSE 100 Index spent most of the morning in the doldrums - dragged down by the heavy falls in Asia overnight - and at one point was down 71.3 points.

A rally after midday saw the index rise steadily in the afternoon before sinking back to close at 5879.4 down 3.2 points on the day.

An overnight 426 point slump in Tokyo - marking a 3% fall - was attributed to the inexplicably strong yen and Japanese bond markets.

Fears that a strong euro would further damage the dollar to which Asia is closely linked also acted against the market.

Far East-linked stocks in London fell, with HSBC down 47p to £15.83 and Standard Chartered falling 13p to 683.5p.

Cable & Wireless bucked the trend, gaining 17.5p to 756.5p as it announced the completion of its purchase of a German Internet firm for £27.5m.

Elsewhere, ICI ditched 29p to 492p after it announced 1,000 job losses worldwide and revealed that it had terminated a contract to sell its Tioxide business to DuPont and NL Industries.

The share slump marked a fall of more than 5%.

PowerGen announced it had bought generator Yorkshire CoGen from Yorkshire Electricity for £94.9m.

After earlier remaining firm, PowerGen shares fell 17.5p to 772.5p.

Telecoms stocks provided some relief after much glowing praise in the press over the festive market roundups.

And quarterly figures showing a boom in mobile phone connections at the end of 1998 lifted all the major players.

Orange gained 96p to 794.5p, Vodafone, helped by a strong set of new connection figures, put on 73p at £10.49.

Securicor, part owner of Cellnet, jumped 34p to 538p, Telewest jumped 12p to 185.5p, Colt Telecom rose 56.5p to 953p.

BP Amoco now the biggest company on the index, enjoyed a buoyant first day on the market after its merger was approved by US authorities last week.

Shares gushed 21.5p up to 924.5p on its debut as dealers shifted into the new super-heavyweight stock.

The company was the heaviest traded stock on the index by far, with 57m shares changing hands.

The biggest FTSE 100 risers were Orange up 96p to 794.5p, Vodafone up 73p to £10.49, Telewest up 12p to 185.5p and Securicor up 34p to 538p.

The big fallers were Scottish and Southern Energy down 52p to 625p, Safeway down 22.75p to 279.25p, GKN down 56.5p to 741p and Hays down 35p to 492.5p.