Morning Markets: QE doubts and gloomy updates cast early shadows

UK markets open easier amid reports that the US Federal Reserve's second phase of quantative easing, due next week, may be smaller than expected.

The prospect of higher interest rates following stronger-than-expected UK third-quarter growth yesterday was also a factor behind the uncertainty.

By 8.45am the FTSE 100 index was down 38 points at 5,668 and the Mid-250 Index declined 77 points to 10,865, unsettled by some gloomy trading statements.

Ex-dividends in GlaxoSmithKline and Whitbread accounted for over three FTSE points

Mining shares led the way down as the dollar continued to strengthen with Xstrata at £12.84 and Kazakhmys £13.58 among the top fallers with losses of around 31p.

Elsewhere BAT lost 37p to £24 as nine-month volumes dipped.

In the uncertain investment climate defensive stocks returned to favour with utilities such as Severn Trent up 14p to £17.23.

British Airways edged up 3p to 283p as it changed the convertible bond terms ahead of next month's Iberia deal.

ARM Holdings, at 369p, recouped 3p of yesterday's fall that followed the figures.

A Morgan Stanley rating upgrade lifted Halfords 10p to 420p and a favourable note from Seymour Pierce contributed to a 19p rise in Talivaara Mining at 553p.

Disappointing  trading updates knocked 49p from CSR at 297p and 58p from Carpetright at 672p and Soco International receded 19p to 308p as Evolution issued a sell note after its latest well report.

Fidessa Group shed another 48p to £15.36 on further consideration of yesterday's trading statement and a profits warning unsettled Helphire at 24p, down 5p.