The FTSE edged higher while sterling fell from a 10-month high on the first day of the UK's new Coalition Government.
At 9.40am, the FTSE 100 edged higher, up 0.4% or 21.49 points to 5355.70.
Meanwhile, in early morning trading, the pound fell against the US dollar on fears that the parties may struggle to overcome ideological boundaries when trying to tackle the deficit.
Sterling dropped to $1.4897 from $1.4956 when it gained 0.7% last night on the news the Conservatives were to form a coalition with the Liberal Democrats.
However, bond investors showed signs of confidence in the new Government, the 10-year gilt yield moving 3 basis points lower to 3.85%.
Risers on the FTSE include Rolls Royce Group, up 5.69% to 612.5p, while Capita Group grew 4.26% to 808p and Legal & General Group advanced 3.33% to 83.8p.
Fallers on the FTSE were led by Standard Chartered, down 2.32% to £16.62, while RBS dropped 2.08% to 48.96p
Meanwhile, unemployment figures released today revealed the number of jobless rose by 53,000 to 2.51m in the first quarter. The Bank of England is also due to publish its latest inflation report today.
On Wall Street, US stocks closed lower after an afternoon rally completely lost momentum in the final hour of trading.
The Dow Jones closed down 0.34% or 36.88 points to 10,748.26 as euphoria turned to nervousness over the €750bn eurozone bailout plan.
In Asia, the Nikkei slid 0.16% or 17.07 points to 10,394.0, erasing earlier gains as concern about the eurozone's debt woes continued to weigh on market confidence.
Toyota rose 2.29% to ¥3,575 after beating forecasts for its first quarter profits.
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