(MENAFN- AFP) The pound faced renewed pressure Monday after polls put the British referendum vote back on a knife-edge, but the London stock market rallied to outperform its eurozone rivals.
Britain's currency dropped to around three-week lows against the euro and dollar, before rebounding.
The euro hit 79.05 pence in Asian trading hours -- the European single currency's highest level against sterling since mid-May.
And the pound slid to $1.4353 -- a three-week low point.
Sterling clawed back some of the losses however heading into the European afternoon session.
"The polls are having a significant impact on the pound," said Craig Erlam, senior market analyst at Oanda trading group.
Traders on Monday were reacting to a series of polls, one of which showed Brexit backers moving into a lead in the polls for the first time in weeks, raising pressure on Prime Minister David Cameron ahead of Britain's June 23 EU referendum.
Financial markets have proved volatile ahead of the vote that could see Britain becoming the first country to drop out of the EU and have proved particularly so as the campaign has heated up.
Elsewhere on currency markets Monday, the dollar clawed back some of its hefty losses after last week's soft US jobs report reduced the chances of an imminent interest rate rise from the Federal Reserve.
A strong yen meanwhile continued to hit Japanese exporters -- resulting in Tokyo's Nikkei stocks index ending the day down.
In Europe, London's benchmark FTSE 100 index outpaced rival Frankfurt and Paris markets, jumping by more than 1.0 percent in morning deals.
"The FTSE 100 rose by as much as 50 points, ahead of other European stock indices," said CMC Markets analyst Jasper Lawler.
"Mining stocks are the main differential between the UK and mainland indices. Commodity stocks are continuing to benefit from Friday's sharp drop in the US dollar and the resulting rise in metals prices."
- Weak German exports -
Frankfurt's gains were capped as official data showed that weakness in China and Germany's other export partners had prompted the biggest drop in industrial orders for Europe's top economy in more than a decade.
The drop of two percent in comparison with March was far worse than the 0.7-percent decline forecasted by analysts polled by financial services provider Factset.
Across the Atlantic, the US Labor Department on Friday said that May saw the world's top economy create the fewest number of jobs in six years, slashing expectations borrowing costs will rise any time soon.
Traders who had been expecting the Fed to announce a rise no later than July -- with the central bank having hinted at such just last month -- were caught off guard.
The dollar was sent plunging two percent against both the yen and the euro on Friday.
"The slowdown in job growth in recent months must have put paid to any chance of a hike in interest rates by the Fed at its mid-June meeting," said Richard Jerram, chief economist at Bank of Singapore.
"A July rate hike is still possible but it would require a very strong June jobs report, reversing much of the slowdown of recent months. If the June report is inconclusive then the Fed might find it sensible to wait until its mid-September meeting."
- Key figures around 1145 GMT -
London - FTSE 100: UP 1.0 percent at 6,273.70 points
Frankfurt - DAX 30: UP 0.1 percent at 10,110.00
Paris - CAC 40: FLAT at 4,421.20
EURO STOXX 50: FLAT at 2,998.30
Tokyo - Nikkei 225: DOWN 0.4 percent at 16,580.03 (close)
Shanghai - Composite: DOWN 0.2 percent at 2,934.10 (close)
Hong Kong - Hang Seng: UP 0.4 percent at 21,030.22 (close)
New York - Dow: DOWN 0.2 percent at 17,807.06 (close)
Euro/dollar: DOWN at $1.1349 from $1.1364 on Friday
Dollar/yen: UP at 107.05 yen from 106.63 yen
Pound/dollar: DOWN at $1.4401 from $1.4515
Euro/pound: UP at 78.79 pence from 78.28 pence
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