The FTSE 100 .FTSE index is seen opening down 41 to 45 points, or 0.8 percent on Monday as optimism over a deal to ease the euro zone debt crisis fades, with investors looking for more detail at a Group of 20 meeting later this week.
Mining stocks will also be in the spotlight after metal prices dropped after the dollar rose following Japan's intervention in the currency market to curb a rising yen.
Investors will next watch the Group of 20 meeting in Cannes, France, on November 3-4 for more details on the deal reached by policymakers to tackle the euro zone debt crisis last week, which included boosting the firepower of the rescue fund and imposing hefty losses on holders of Greek debt.
Key questions still remain unanswered, especially as to how or who will finance the enlarged European Financial Stability Fund (EFSF), Jonathan Sudaria, night dealer at Capital Spreads, said.
Although the head of Europe's bailout fund, Klaus Regling, sought financial support from China on Friday to help ease the bloc's debt crisis, there was no quick deal in sight.
In what has been described as mildly desperate, Regling was quickly dispatched to Asia on Friday in an attempt to drum up funding from China and Japan but has only received a lukewarm response. Traders are unlikely to be in a risk on mood, Capital Spreads' Sudaria said.
Over the weekend, Spain and Portugal called for the United States and other G20 powers to take action to help contain the fallout from the European debt crisis at the G20 summit.
Adding to the concern was a disappointing bond auction in Italy on Friday, underlining the country's vulnerability at the heart of the debt crisis.
The FTSE 100 is on track to gain 11.2 percent in October, its best monthly gain since May 1990 and is ripe for investors to take profits.
UK stocks to watch on Monday are:
The British bank issues a third-quarter trading update.
BANK WRITE-OFFS WILL BE HIGHER THAN EXPECTED - The Independent
The UK's banks will have to write off 3 billion pounds more in bad loans than currently expected because of disappointing economic growth, the Ernst & Young Item club says.
The commodity trader is no longer in talks to provide financing to Indonesian conglomerate Bakrie Group, which is close to a deal on Monday with Indonesian investors to help avert a default on a $1.345 billion loan, two sources with direct knowledge of the deal said.
Two large shareholders in G4S -- Artemis and Schroders -- are set to vote against the security firm's 5.2 billion pound ($8.4 billion) deal for Danish outsourcing firm ISS ISSHOI.UL, the Sunday Telegraph reported. I
The directors of G4S GFS.L are engaged in a last-ditch attempt to rally shareholder support for its 5.2 billion pounds takeover of ISS
Britain's BT has brought forward by one year its target to roll out a fibre network, meaning two thirds of premises will have access to the superfast broadband by the end of 2014.
Hugh Osmond is weighing up an approach to the administrators of Luminar, with a view to bidding for most of its nightclubs, according to The Times.
CAPITAL SHOPPING CENTRES GROUP
The real estate investment firm issues a third-quarter trading update.
The paper firm is issuing a trading update.
(Reporting by Joanne Frearson)