European markets have seen more volatility as traders digested a multitrillion-pound emergency plan being drawn up to rescue the euro.
It is thought the package, costing up to three trillion euro (£2.6 trillion) and potentially allowing Greece to default on its debts without sinking the eurozone, could be revealed within days, according to reports.
Traders remained sceptical over the prospects for success, causing the FTSE 100 Index to open 2% lower before it returned back above the 5000 barrier to stand slightly higher.
Louise Cooper, markets analyst at BGC Partners, predicted a rollercoaster ride for markets while details of the plan are thrashed out.
She said: "A sufficiently credible plan to solve the eurozone crisis will necessitate changes to treaties, laws, and not least the German constitution. There will be wobbles and uncertainty at every vote and stage of political implementation.
"And then we have the problem that the voters in each country are unlikely to be keen on the solution and have not had the downside risks explained to them in sufficient detail. So what have we to look forward to? Continued financial uncertainty, high volatility and nervousness."
Pumping cash into at least 16 of Europe's beleaguered banks is the cornerstone of a rumoured three-pronged plan being discussed to save the single currency.
The shoring up of vulnerable banks would allow Greece to partly default on its debt - wiping billions of pounds from the country's balance sheet and allowing the country to remain within the eurozone.
The third part of the plan involves providing additional firepower for the European Financial Stability Facility (EFSF) - the bailout fund - which could cost trillions of euros.
Ben Critchley, a sales trader at IG Index, said: "For now at least, it looks as if markets are giving some credence to a firm plan on how to tackle the debt crisis beginning to emerge. But if recent experience is anything to go by, this patience is unlikely to last too long if details are not forthcoming."
European markets have seen more volatility as traders digested a multitrillion-pound emergency plan being drawn up to rescue the euro.
It is thought the package, costing up to three trillion euro (£2.6 trillion) and potentially allowing Greece to default on its debts without sinking the eurozone, could be revealed within days, according to reports.
Traders remained sceptical over the prospects for success, causing the FTSE 100 Index to open 2% lower before it returned back above the 5000 barrier to stand slightly higher.
Louise Cooper, markets analyst at BGC Partners, predicted a rollercoaster ride for markets while details of the plan are thrashed out.
She said: "A sufficiently credible plan to solve the eurozone crisis will necessitate changes to treaties, laws, and not least the German constitution. There will be wobbles and uncertainty at every vote and stage of political implementation.
"And then we have the problem that the voters in each country are unlikely to be keen on the solution and have not had the downside risks explained to them in sufficient detail. So what have we to look forward to? Continued financial uncertainty, high volatility and nervousness."
Pumping cash into at least 16 of Europe's beleaguered banks is the cornerstone of a rumoured three-pronged plan being discussed to save the single currency.
The shoring up of vulnerable banks would allow Greece to partly default on its debt - wiping billions of pounds from the country's balance sheet and allowing the country to remain within the eurozone.
The third part of the plan involves providing additional firepower for the European Financial Stability Facility (EFSF) - the bailout fund - which could cost trillions of euros.
Ben Critchley, a sales trader at IG Index, said: "For now at least, it looks as if markets are giving some credence to a firm plan on how to tackle the debt crisis beginning to emerge. But if recent experience is anything to go by, this patience is unlikely to last too long if details are not forthcoming."