Initial optimism in London markets was short-lived as both the pound and the FTSE 100 pared some earlier gains after Boris Johnson resigned from the post of prime minister.

The FTSE 100 started the day up 0.5%, pushing it above the 7,000 mark for the first time in a week, but it later gave back all and then some of its gains.

Fortunes reversed less than an hour after the open, falling to 6,915, down 0.8% from Friday’s close.

The pound continued its multi-day rally, rising from a low of below $1.11 around midday on Friday to nearly 1.14 as stock markets opened after the weekend.

However, gains later eased to just over $1.13 a pound, up 0.1% on the day.

It was a similar story in the market of gilded products. The interest rate on the 30-year gilt UK Treasury – which determines how much Govt pay its debt – fell by almost 0.2 percentage points to about 3.9%, but later rose again to 4%.

The moves follow former prime minister Boris Johnson’s decision not to seek his party’s nomination to retake the job, even after a weekend of phone calls to drum up support.

Mr Johnson claimed he had more than 100 supporters deputies it was necessary to advance to the next round, in which he would most likely face Rishi Sunak.

However, he said on Sunday that seeking the top job “simply wouldn’t be right”, adding that the Conservative Party would be too divided if he took over.

That leaves former chancellor Rishi Sunak as the favorite in the race for Number 10 in Downing Street, and he could even win later on Monday without a member’s vote if no one manages to win the support of more than 100 MPs.

But international markets were also volatile on Monday. In Hong Kong, shares fell about 6% shortly before the start of trading in London.

Traders there responded to another leadership race, as the president of China Xi Jinping strengthened his power.

Mr Xi was elected to another five-year term to add to the 10 he has already spent in power. He also appointed his allies to most of the leadership positions in the Chinese Communist Party.

The drop in Hong Kong came despite China posting better-than-expected third-quarter GDP figures on Monday, which showed the country is slowly emerging from its Covid-19 lockdown.