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

UK 100 called to open -10pts, with Asian markets recovering from their weak opening, provided by Friday’s downbeat close by European and US markets, despite Japanese trade data slumping on a bigger-than-expected decline in exports and a downbeat outlook from US technology companies’ Q3 earnings continuing to have a negative influence.

With a lack of overnight macro news to drive markets, focus remains on Europe after the lacklustre EU summit outcome (waiting, until December) of last week and notably on Spain, where a bailout request is still being awaited.

Elections in two Spanish regions were as expected, with Galicia seeing PM Rajoy’s Popular Party taking the majority but being beaten in the Basque region (key results with Catalonia snap election  in November). The former may be considered a confidence vote on his 10 months in power and that he can manage a bailout request (when he does finally ask) and the restrictions that come with it.

Note that a People’s Bank of China (PBOC) backed newspaper report states that there are currently no grounds for further loosening of monetary policy, with money supply growth already above target helped by the US Federal Reserve’s (Fed) third round of quantitative easing (QE3) and with recent trade and economic indicators suggesting the economy’s slowdown may have bottomed. Good news for non-hard landing bulls, bad news for those hoping for more monetary stimulus.

In FX, GBP/USD bounced back overnight after its test below 1.60, with safe-haven seeking in the dollar easing. EUR/USD has also rebounded, although it hadn’t weakened as much as GBP/USD with the continued trade-off between Euro optimism and safety seeking in the greenback. USD/JPY maintains its 1-week uptrend on the stronger US currency and worse than expected Japanese trade data.

In commodities, Gold pulled back from its test below $1715 (7-week lows) mirroring the USD strengthening and subsequent pullback. US Crude Oil widened its trading range by making a new 8-day low but rebounding overnight. Brent Crude also recovered after sharp declines and after making a new 10-day low.

With a barren macro data calendar, traders will be looking to the rest of the week’s happenings with US earnings continuing to flow through, following some weak prints last week (McDonalds, General Electric). Today we have resources-demand barometer Caterpillar, and more updates from the technology sector from the big names Texas Instruments and Yahoo.

Later in the week we have Eurozone PMI Manufacturing and Services as well as the Fed’s monthly Federal Open Market Committee (FOMC) meeting and statement to update us on the thinking regarding policy and the US economy. The end of the week sees the UK and US GDP updates which could provide a real driver for risk-assets.

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

• Japan               Merchands Trade Balance                 Worse
• Japan               Adj Merchands Trade balance           Worse
• Japan               Merchands Trade Exports                  Worse
• Japan               Merchands Trade Imports                  Better
• Japan               Nationwide Dept Store Sales              Declined, but slower
• Japan               Tokyo Dept Store Sales                       Better growth
• Japan               Nationwide Supermarket Sales          Decline, accelerated
• See Live Macro calendar for all details

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

• Senior sees 2012 adj pretax profit in line with expectations
• Abcam says will deliver continued growth
• Earthport raises 8 mln stg through placing
• Circle Oil sees positive Egypt well results
• Devro warns on year profit
• Fidessa sees flat 2012 revenue
• BP says not deal yet on TNK-BP stake sale
• Max Petroleum to move Eskene North drill location
• Interior Services wins 100 mln stg of contracts
• Telford Homes sees significant rise in H1 profit