Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires

UK 100 called to open +45pts, playing catch up after its two days of holidays to mark the Queen’s Jubliee. Asian markets buoyed by positive US ISM Services data and despite nothing concrete merging from the G7 conference call on Europe’s economic woes. Risk appetite boosted by the prospect of coordinated central bank action (monetary stimulus) to stem the European crisis, with the Wall St Journal suggesting the Fed is considering more action and Chinese press calling for the PBOC to cut rates.

US markets initially sold off after poor ISM New York and Factory orders, but pared losses on expectations of G20 preparing financial commitments to boost IMF to help with European crisis. Progress hindered by lack of info on G20 preparations and Germany not seeing any decisions on financial integration in the Eurozone before 2013.

Spain has made its most explicit call for Europe to help in recapitalising its banks, with the country’s door to financial markets closing as bond yields remain in prohibitively elevated levels and ahead of a debt sale on Thursday. Germany remains against direct aid to Spain’s banks (via ESM), wishing to follow current treaty by financing through nations. If can’t, then country must request bailout.

The ECB meets on Wednesday, while the BoE meets on Thursday. Pressure is building on both to act to simulate growth in an attempt to reduce the effects of austerity, recession and fallout from Eurozone sovereign debt crisis. Recession highlighted again yesterday’s mixed PMI Services  figures from Italy, France, Germany and Europe as a whole. Eurozone retail sales also much weaker than expected.

Overnight, Australian GDP much stronger than expected, just a day after its central bank cut rates for the second month running on fears of poor growth and a worsening global outlook. Negative news overnight came from Moody’s downgrading Austrian banks and action being taken on six German banks (silent problem, elephant in the room).

Macro data today will focus on Eurozone GDP, expected unchanged at flat, and German Industrial Production, seen down on the month and slowing on the year.

Overnight Macro Data: (Source: Reuters/DJ Newswires)

• UK                    BRC Shop Price Index              Improved, In-line
• UK                    Lloyds Bus Barometer             Plunge in confidence
• Aussie              GDP                                         Much Better
• See calendar for all details

UK Company Headlines: (Source: Reuters/DJ Newswires)

• Michael Page announces 3rd party purchase of 5m shares
• Nautical Petroleum finds oil in Carnaby well
• Valiant Petroleum terminates contract with Awilco Drilling
• Premier Oil finds ‘good quality’ oil at Carnaby well
• San Leon Energy says to buy more Polish shale acreage
• Lloyds sells Australian real estate loans for £388m
• Dragon Oil launches $200m share buyback programme
• Chemring sells marine interests for £32m

Morning Press Selection:

• Banking union and the euro’s future – FT.com – Editorial http://on.ft.com/LiYrrp
• Battle rages over supply shock risks to economy – FT.com – UK Economy http://on.ft.com/LnVbcM
• Return to Greece’s past a radical mistake – FT.com – EU Economy http://on.ft.com/JJmNp7
• Panic has become all too rational – FT.com – Columnists http://on.ft.com/KLFRXK
• Italy’s problems threaten to overwhelm – FT.com – EU Economy http://on.ft.com/KMU9Yz