Inflation in Germany fell to the lowest level since February 2004, according to the Federal Statistics Office.

The euro started the day worth £1.27415, 148.185 yen and £0.67100.

In September, consumer prices in Germany rose by 1.0 per cent - down from 1.7 per cent in August.

The fall was said to be down to falling heating oil and motor fuel costs. Import prices in Germany rose by 5.5 per cent compared with a year ago, down from rises of 5.6 per cent and 6.3 per cent in June and July respectively.

Lower inflation has reduced the pressure on the European Central Bank to increase interest rates.

In the UK, sterling was bolstered by comments from deputy governor of the Bank of England Sir John Gieve in the Financial Times.

Sir John said serious thought was given to a second interest rate rise this year at last month's meeting of the monetary policy committee, even though there was a unanimous vote to freeze rates.