City sources predict the FTSE 100 will open 16 points lower than Friday's close of 6,439.96 as the US Federal Reserve's policy meeting looms.
The Fed may announce a scaling back of its monthly $85bn in bond purchases at its December 17th to 18th meeting.
Fuelling speculation of a tapering was last week's news that a bipartisan US budget was passed by the House of Representatives at a wide margin (332 to 94). The deal eases the fiscal uncertainty that has weighed on markets in recent months and is expected to sail through the Senate next week. It would end three years of spending battles that brought the government to near-collapse.
"This week's Fed meeting is likely to seriously weigh on risk appetite in the early stages of the week, as investors become increasingly concerned about a reduction in asset purchases, that could bring to an abrupt end the daily record highs being recorded in US indices," said Alpari analyst Craig Erlam.
"The data over the last couple of months has certainly justified a small taper, it's just a case now of whether [Fed] Chairman Ben Bernanke will want to risk rocking the boat at his final meeting in charge or wait to see another month of positive economic readings and leave the decision to his successor Janet Yellen."
Also moving markets is the release of a HSBC/Markit report that showed Chinese manufacturing activity eased in December. A flash reading of purchasing managers' index (PMI) fell to 50.5 from 50.8 in November, missing the 50.9 estimate. A reading above 50 signals expansion.
On today's macro-economic agenda will be the release of data including Eurozone manufacturing and services, US industrial and manufacturing production and US existing home sales.
In UK company news this morning, BG Group has transported its first gas from the Surat coal seam gas fields of its Queensland Curtis project onto Curtis Island where the liquefaction terminal is located. The delivery of first gas onto the island comes as a key milestone for the company. It follows two years of laying 46,000 lengths of one-metre diameter steel pipe over 540 kilometres - the longest large-diameter buried pipeline in Australia.
Temporary power group Aggreko said it now expects full year results to be slightly higher than previous expectations after progress across the group. On an underlying basis, it expects group revenues for 2013 to be around 3% higher and trading profit will be at similar levels to the prior year, it said in a trading update.
European textile firm Berendsen said it has traded in line with expectations in the fourth quarter with progress reported across the board. In a pre-close trading update for 2013, the workwear, rental and laundering services company said reported revenues for the first 11 months of the year were up 7% on last year.