Weak leads from US and Asian equity markets saw the FTSE open in the red, as investors fretted over a stalling global economy, despite a lift in UK consumer confidence and an increase in consumer lending.

Concerns over the health of the US economy saw Wall Street close lower overnight, paring last Friday's gains off the back of Fed Chairman Ben Bernanke's comments that the Fed was prepared to take the necessary steps to support the struggling US economy. Asian equity markets also finished in the red, lead by a 3.6% drop in the Japanese Nikkei. Japanese investors dismissed the government's attempt to stem the yen's rise and support Japanese companies through the expansion of its bank-loan programme, on the view that the additional $118 billion to the program won't be enough to weaken the yen.

The negative sentiment has spilled over into European equities this morning, with financials and resource stocks dragging the FTSE lower, despite some improvements seen in the UK consumer space. The Bank of England reported that lending to individuals increased by £0.3 billion in July, led by a larger-than-expected increase in net consumer credit. Mortgage approvals also unexpectedly rose to 48,700 in July from an upwardly revised 48,600 the prior month. The median estimate from economists surveyed by Bloomberg pointed to mortgage approvals falling to 46,500.

The pick-up in consumer lending follows an improvement in consumer confidence in August, according to a survey conducted by GfK. The consumer confidence gauge unexpectedly rose to a reading of -18 in August, ahead of expectations for a decrease in confidence to -24. The improvement is an encouraging sign for the UK economy and suggests that consumers are reacting to the rebound in GDP growth. However, the fact that this gauge is still negative shows confidence remains weak overall and may stay that way as the UK budget cuts start to affect the economy. The latest gauge on US consumer confidence will be released this afternoon at 3pm (London time).

By 11am (London time) the FTSE 100 was 48.10 points lower (-0.93%) at 5153.46, while the broader FTSE 250 declined 53.05 points (-0.55%) to 9726.85.

Bunzl was one of the few gainers on the FTSE 100 this morning, after the vending machine supplier saw first-half revenue rise to £2.35 billion. Shares in Bunzl were up 2.42% to 719p. Banks were broadly lower this morning, lead by a 2.62% decline in Barclays, while Lloyds and Standard Chartered both lost 1.7%.

In Europe, Germany saw the number of unemployed drop by 17,000, the 14th straight month of declines. However, the headline unemployment rate remained unchanged at 7.6%. Meanwhile, French retailer Carrefour returned to profit in the first-half, reporting net profit of €82 million. This helped the euro see modest gains against the US dollar, rising 0.15% to $1.2682.

Sterling was weaker against the US dollar at $1.5425 as investors shunned riskier assets. The yen was stronger against the US dollar as investors doubt the Japanese government's ability to intervene in a meaningful way to weaken their currency. USD/JPY is hovering at 15 year lows at 84.40 yen.

This afternoon the S&P/Case-Shiller house price index will be released at 2pm (London time), with the market expecting year-on-year prices to decline to 3.5% in June from 4.61%. Details of the Chicago Purchasing Managers' index for August will be made available at 2.45pm (London time) with economists forecasting the gauge to fall to 57 from 62.3 the previous month. Finally at 3pm (London time), investors will be looking for US consumer confidence to increase from 50.4 to 50.7, according to the median estimate from economists surveyed by Bloomberg.