The FTSE 100 was finding it hard going in early action with investors nervously eyeing a key meeting of the European Central Bank's governing council later in the day.
Markets are hoping the ECB council will reveal further moves towards full quantitative easing for the struggling eurozone. But conflicting noises from the bank have made it hard for investors to assess the scale of any further stimulus measures.
Jasper Lawler, market analyst at CMC Markets, points out that just a couple of weeks ago ECB president Mario Draghi and vice-president Vitor Constancio gave some of the biggest hints yet that the bank is looking to engage in more stimulus, specifically referencing government bond purchases as a policy tool.
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Indeed, Constancio went so far as to suggest the government bond purchases would be carried out according to their "capital key" - namely the biggest contributors to the ECB would see the larger proportion for their bonds bought by the ECB.
Lawler notes, however, that the strength of any commitment across the eurozone to full blown quantitative easing (QE) varies: "Opposing views within the ECB on the need for sovereign QE is nicely demonstrated by recently announced record low unemployment in Germany and record high unemployment in Italy; the Italians and Germans have distinctly different circumstances from which they are basing their decision-making."
Lawler reminds that only recently Constancio, along with other ECB governors, also called for the need to wait for the results of current stimulus measures, including the purchase of asset-backed securities and covered bonds and the Bank's long term refinancing operation for eurozone banks, before starting a new program.
"For this reason, the announcement of sovereign QE at this meeting seems unlikely but some more explicit hints at the program starting in the first quarter maybe all the markets need to push further ahead," says Lawler.
Elsewhere on the economics front the Bank of England is due to announce its latest rate decision. Rates are widely expected to remain pegged at 0.5%.
Ryanair upgrades forecasts again
EasyJet was another airline in demand, rising nearly 3% after it revealed a rise in the number of passengers carried during November. TUI Travel owner of Thomson travel brand was also in demand, rising nearly 4%, after it posted a rise in full year profits.
Resource stocks were faring less well, with Rio Tinto notably down nearly 2% after a broker downgrade.
Investors continue to wax and wane on oil stocks against the backdrop of crude price volatility. This morning sentiment over oils was downbeat, with the likes of BP, Shell and Tullow Oil in the red.
Elsewhere, Halifax revealed a further cooling of the UK house market and said it expects a further retreat over 2015. The annual growth in UK house prices slowed to 8.2% in November compared with 8.8% in October, the mortgage lender said.
At 10am the FTSE100 was ahead 5 points to 6721.64.
