UK and European indices are set to head lower this morning, in a week that is likely to be characterised by volatile trading amidst uncertainty over global economic cues.<br /><br />GFT is quoting the FTSE 100 index to open down 40 points from Friday’s close of 5,044. The German DAX is also called lower, down 24 points at 5,390, and the French CAC is forecast to open down 17 points at 3,790.<br /><br />The negative direction is rooted in the US markets. On Friday the Dow continued a steep drop after European stock markets closed, to suffer a 250 point fall, its sharpest since July. The larger S&P 500 index also suffered, ending October with its first monthly fall since February.<br /><br />Citigroup shares will be key to setting the tone for the broader market this week. A report on Friday which said that the bank was like to have a $10bn (£6.1bn) fourth-quarter write-down spooked investors, and combined with concerns over commercial lender CIT group, led to a sell-off across financial stocks everywhere.<br /><br />The Federal Reserve meets with an interest rate decision due on Wednesday, although as far as focus for traders is concerned this may well be trumped on Thursday by the much-anticipated decision from the Bank of England over whether to increase quantitative easing. Rumours are circulating that the current £175bn limit could be raised by £25bn or more. The speculation will hang over the markets and the uncertainty which will pervade until we know the outcome of that decision could well give the bears the upper hand for a large part of the week.<br /><br />The VIX, the benchmark index for US stock volatility, surged the most in a year on Friday and we could well see the bumpy ride continue over the next few days.<br />Martin Slaney is head of derivatives at GFT Global Markets.