The pound slumped around 1 per cent against the dollar and euro on Monday as post-Brexit trade talks between Britain and the European Union hung in the balance.

Major stock markets dropped except for London, as the sliding pound helped boost share prices of multinationals trading on the benchmark FTSE 100 index.

Around 14:30 GMT, the pound was down by 0.8 per cent against the dollar, while the euro jumped by 1 per cent versus the British currency.

The FTSE held steady, while oil prices retreated by about 0.8 per cent.

Down by around half-a-per cent, sterling's losses widened sharply after Britain's Sun newspaper said Prime Minister Boris Johnson was willing to abandon post-Brexit trade talks with the European Union.

Johnson is set to have a phone call with EU Chief Ursula von der Leyen at 16:00 GMT, an EU spokesman said, with time running out to strike a deal before Britain leaves the EU single market on December 31.

"Sterling is in the firing line because of the nerves surrounding the stand-off, and that is the reason why the FTSE 100 is outperforming against its eurozone counterparts," said David Madden, analyst at CMC Markets UK. 

"International stocks like British American Tobacco, AstraZeneca, Unilever, Diageo and Imperial Brands are all helping the index.

"Those companies benefit from the slide in sterling as they earn a large portion of their revenue overseas," Madden added.

The threat of a wrenching "no-deal" comes after Brussels' Chief Negotiator Michel Barnier briefed ambassadors from EU member states at a pre-dawn crisis meeting, warning that divisions were still stark after talks with his UK counterpart David Frost broke up overnight.

Vaccine stimulus 

Market focus was also firmly on COVID-19 vaccine developments as the new trading week got underway.

Traders are keeping tabs on the deployment of vaccines around the world, with Britain in line to start giving jabs this week.

US approval of its first drug could come as soon as Friday. Belgium, France and Spain have said jabs will begin in January for the most vulnerable.

There is optimism also that US lawmakers will finally agree on a long-awaited stimulus package.

Senators and their teams worked all weekend on a detailed bill, which "will probably come out early this week", Republican Senator Bill Cassidy told "Fox News Sunday".

Wall Street opened mixed with the Dow slipping by 0.3 per cent however, after the three major indices all posted record highs on Friday