Under-pressure drugmakers helped nudge the FTSE 100 lower by around midday on Tuesday, after AstraZeneca and two of its European peers reported product pipeline issues.

With the weakest pipeline of its European peers, UK-listed AstraZeneca, down 2.3 percent, was hit hardest by a double blow to treatments for cancer and depression.

These triggered $381.5 million in charges and will push 2011 profits to the lower end of its forecast range.

Europe's Novartis and Sanofi reported product problems too, underlining the difficulties of developing medicines to replace those going off-patent.

UK peer GlaxoSmithKline was 1.9 percent lower.

Britain's top share index <.FTSE> was down 14.04 points, or 0.3 percent, at 5,350.95. Volume, however, was painfully thin -- the FTSE 100 had traded just 18.9 percent of its average 90-day volume approaching midday.

Traders said most investors have closed their positions in the run-up to Christmas, citing lingering concerns over Europe's debt crisis and over the global economy as reasons to stay on the sidelines.

The FTSE 100 has fallen more than 9 percent this year.

We might see a mini-rally early in January as fund managers return to their desks and look to balance portfolios, but with the outlook for global growth looking bleak and no sign of a solution to Europe's debt crisis, the first half of 2012 could be painful for investors, Jimmy Yates, head of equities at CMC Markets, said.

Riskier assets such as miners <.FTNMX1770> and integrated oil stocks <.FTNM0530> were broadly weaker given the economic outlook.

Banks remained under pressure with no end to Europe's debt crisis in sight, and regulatory concerns lingering.

UK-listed banks <.FTNMX8350> extended the previous session's falls after the British government backed reforms to the country's banking system, which could cost lenders 8 billion pounds.

Royal Bank of Scotland fell 3.9 percent after the government called on it to cut the investment banking arm further.

These proposals justify our preference for UK-Asian banks over UK domestic banks, which are operating in a hawkish regulatory environment with a worsening macroeconomic outlook, Nomura said in a note.

UBS said the reforms could wipe 1 billion pounds off Britain's GDP.

Also weighing on the FTSE was the forecast for a weaker open for U.S. stocks, ahead of U.S. housing starts and building permits data for November due out at 1330 GMT.

Aggreko climbed 3.1 percent as Citigroup raised its earnings estimates by up to 12 percent after the temporary power provider nudged up 2011 profit forecasts on Monday.

Europe's biggest home improvements retailer, Kingfisher , rose 1.6 percent, following recent weakness, as British retail sales unexpectedly rose in December at their fastest pace since May, though the longer term trend remained weak.

London-listed luxury goods firm Burberry was up 1 percent after saying it is assessing the price of its licence with French fragrance company Interparfums .

The firms are also in talks to create a new structure for Burberry's fragrance and cosmetics line.

Mid-cap <.FTMC> SVG Capital , the biggest investor in buyout firm Permira, rose 21.4 percent after it unveiled plans to return 170 million pounds to shareholders and said it would start placing money with other private equity groups.

(Editing by David Hulmes)