The FTSE 100 Index started the new year quietly as it closed lower amid thin trading volumes - while the pound took a hammering following disappointing manufacturing data.

London's leading share index fell 18.3 points to 6547.8 as equity market activity was seen as unlikely to return in earnest until Monday while sterling plunged to a 17-month low against the US dollar.

It came as UK manufacturing figures showing a dismal end to 2014 with growth slowing to a three-month low in December.

Separate figures for the sector's performance in the eurozone showed it remained close to stagnation, helping German's Dax and France's Cac 40 head into a negative start for 2015.

In New York, the Dow Jones Industrial Average also struggled for direction as the US posted its own disappointing manufacturing data.

The poor UK figures bolstered expectations that interest rates will not rise before the end of this year, sending the pound two cents lower against the greenback to below 1.54 US dollars, its lowest level since August 2013.

Sterling was also a cent lower against the single currency at just below 1.28 euros - even though it was also under pressure after comments from European Central Bank president Mario Draghi seen as indicating a round of money-printing stimulus.

In equities, Royal Bank of Scotland was among the fallers after a report in the Times said it could face fines of more than £5 billion over its involvement in the sale of toxic mortgage-backed debt in the US - more than the sum it has set aside.

Shares fell more than 1%, or 5.3p, to 389.1p.

Meanwhile Sainsbury's was under pressure ahead of a Christmas trading update due next week, with the stock 3.3p lower at 243.4p. Tesco, which also publishes figures next week, edged 1p lower to 188p.

The slide in oil prices also fed through to shares as the cost of a barrel of Brent crude slipped close to 55 US dollars though later recovered to around 57 US dollars.

Exploration firm Tullow Oil, which has been hammered by the fall in recent months, losing half its value over the course of 2014, saw shares fall but by the end of the session steadied to finish 0.2p up at 414.1p.

Rival BG slipped 0.8p to 864.2p, despite being boosted by the announcement that the Egyptian government had paid it 350 million US dollars (£225 million) as the state seeks to repay outstanding debts to the energy industry.

Elsewhere state-backed Lloyds Banking Group climbed after an upgrade from "hold" to "buy" from brokers at Investec. Shares rose 0.3p to 76.2p.

The firmer price will help the Government in its plan for a gradual sell-off of part of its 25% stake in the bank over the next six months - as long as the stock is not below the break-even price of 73.6p.

The biggest risers on the FTSE 100 Index were TUI up 19p at 1089p, Weir Group up 32p at 1883p, Sports Direct up 12p at 723p and Associated British Foods up 41p at 3194p.

The biggest fallers on the FTSE 100 Index were Coca-Cola HBC down 40p to 1188p, Barratt Developments down 10.5p to 460.5p, Taylor Wimpey down 2.9p to 134.9p and Smith & Nephew down 23p to 1165p.