European markets held firm today as investors digested the success of anti-austerity party Syriza in Greek elections last night.
The FTSE 100 Index was less than 0.5% lower following the election of Syriza, which wants to renegotiate the 240 billion euro (£179 billion) bailout the country agreed with the European Union, International Monetary Fund (IMF) and European Central Bank (ECB) in 2010.
The radical left wing Greek party's victory threatens to boost other parties in Spain and elsewhere in Europe, potentially shaking the euro and financial markets. The result threatens the continued membership of Greece in the 19-bloc currency.
The euro fell to an 11-year low of 1.11 against the US dollar overnight before recovering slightly, while the single currency was steady against the pound at 1.34 after heavy losses in recent sessions.
CMC Markets chief analyst Michael Hewson said: "It's events in Europe that are at the epicentre of the markets focus once again, and the victory of the anti-austerity party Syriza in the latest Greek elections, and the ramifications of which could well ripple out across Europe through the rest of this year, as elections loom in Portugal, Spain as well as Italy."
The election result comes after the European Central Bank last week set out a 1.1 trillion euro (£820 million) asset purchase programme, an event which has already weakened the euro.
Last month, inflation in the eurozone turned negative for the first time since 2009, partly due to the recent sharp fall in oil prices.
IG chief market strategist Chris Weston added: "If the trend through Europe is to reject austerity, reduce the shackles of debt and look for more pro-growth measures, then Greece has set a strong precedent and parties like the newly-formed Podemos in Spain will be keen to see if this trend can spill over as they approach national elections later in the year."