STERLING staged a late day recovery amid reports that Mark Carney will finally put to rest speculation over whether he will serve his full term as Bank of England governor.
The pound rose as much as 0.17 per cent to trade near 1.221 against the US dollar, after falling 0.2 per cent to 1.217 earlier in the session.
Versus the euro, sterling was higher by 0.2 per cent at 1.114.
The FTSE 100 closed lower by 0.6 per cent or 42 points to finish at 6954.4.
It comes after the Financial Times reported Mr Carney will finally make an announcement on whether he will stay at the helm of the central bank until 2021.
When he took the post in 2013, it was agreed that the Canadian would serve an initial five-year term with the option of another three years.
However, there has been mounting speculation that the governor is preparing to stand down early amid bitter criticism by Brexit supporters of his conduct during the EU referendum campaign.
Michael Hewson, chief market analyst at CMC Markets UK, said: "He's already well into his initial five-year term, and while he's yet to decide to take up the option of the extra three years, he doesn't strike me as a quitter.
"There is also the fact that a departure now at such a sensitive time would tarnish any form of legacy that he may wish to leave, which suggests he'll probably be around for a while longer, keeping his hand on the tiller."
Downing Street voiced strong backing for the governor, saying that Theresa May regards him as "absolutely" the right man for the job, adding that the Prime Minister is "supportive" of Mr Carney remaining until 2021.
Mr Carney did not respond to questions about his future from reporters as he arrived for a planned meeting at 10 Downing Street on Monday, and remained tight-lipped as he left after an hour and 40 minutes inside.
Across Europe, the French Cac 40 and German Dax closed lower by 0.9 per cent and 0.3 per cent respectively.
The price of Brent crude fell by 3.6 per cent to $48.84 per barrel after non-Opec crude producers stopped short of committing to an Opec output cap over the weekend that would help support oil prices.
However, officials said another meeting would be scheduled ahead of Opec's formal gathering on November 30.
In UK stocks, WPP shares rose 70p to 1778p despite reporting that "Brexit anxiety" had led to a slowdown in UK sales growth.
The advertising giant said third quarter like-for-like growth in the UK came in at 2.1 per cent, compared with 3.5 per cent in the previous quarter.
However, the weak pound helped boost overall revenue by 23.4 per cent to £3.6 billion, with North America and continental Europe driving growth.
Away from the top tier index, Majestic Wine shares closed lower by 4.75p at 285.5p despite announcing a new next-day delivery service that it said would bolster Christmas trading.
It comes after the company issued a profit warning following a failed marketing campaign for its Naked Wines business in America and weak sales to business customers.
The biggest risers on the FTSE 100 were WPP up 70p to 1778p, Randgold Resources rising 240p to 7240p, Anglo American up 31.5p to 1131p, and Antofagasta increasing 12p to 543p.
The biggest fallers were Next down 158p to 4616p, Shire down 131.5p to 4650p, Royal Bank of Scotland Group (RBS) down by 4.9p to 189.1p, and Prudential down 34.5p to 1334.5p.
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