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

UK 100 called to open -10pts despite a positive handover from US to Asia, after US Federal Reserve signalled QE was here to stay, and any halt would only be after a tapering back in monthly bond purchases following evidence of improved employment metrics. It made only slight upgrades to growth assessments, and minor cuts to growth forecasts.

In Asia, Japan’s Nikkei higher, playing catch-up after public holiday and continued expectations of surprise aggressive monetary easing by new guard at BoJ (first press conference this morning). China benefiting from improvement in Manufacturing PMI after last month’s dip (attributed to New Year celebrations). Australia flat despite some political uncertainty. Tensions on Korean peninsula growing, after North’s threat to target US bases.

In Cyprus, or rather in Russia as this is where the focus is on for the money to come from, Prime Minister Medvedev compared Troika’s bank levy proposal to Soviet era policies and called for rethink. No help plan from Moscow though, yet. ECB still offering existing help.

Cyprus Banks to stay shut until next Tuesday to avoid capital flight and banks’ demise. Government looking at alternative ways of raising the €5.8bn needed; merge biggest banks and split good and bad; sell stakes in banks; sell offshore gas assets; nationalise state pension fund; emergency bonds.

In focus today will be the raft of PMI Manufacturing and Services data from the Eurozone with expectations for minor improvements from the prior readings but as usual, all but Germany below the 50 level separating growth from contraction. In the UK, Retail Sales seen rebounding in Feb. The BoJ Press Conference will be looked to for news of any aggressive emergency policy announcement ahead of the scheduled meeting in early April.

In the afternoon, US Jobless Claims key as metric the Fed is eyeing for QE. US PMI Manufacturing seen improving and remaining well in growth territory. US Philly Fed to improve but stay negative, US Housing to see an uptick in Existing Home Sales after the mixed permits and starts earlier in the week.

UK 100 trading at lower end of narrow 6430-3480 range. As we always say, tight ranges often lead to explosive reactions, very possible when we have more concrete decisions on Cyprus. As for last few days, 100pt swing either way still possible.

In FX, GBP/USD still trading sideways around 1.51 with little reaction from Chancellor’s budget or Fed’s press conference. EUR/USD off its worst levels after Fed confirmed extraordinary measures for foreseeable future and despite Europe’s on-going Cypriot woes. 1.30 and 200-day moving average still the hurdles.

In commodities, Gold holding up above $1600 at $1608, but off its best levels of $1616. Despite Europe worries, safe-haven seeking not quite dominating. In Oil, US Light Crude rebound from $92.5, faltered at $93.5 and putting month-long uptrend in doubt. Brent Crude shoring the same, with bounce from $107.5 lows slowing before $109 as downtrend from mid-month persists, but with potential support at $108.5.

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

• China               HSBC Flash Manufacturing PMI         Better
• Japan               All Industry Activity                             In-line
• Switz                Trade Balance                                     Better

See Live Macro calendar for all details

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

• Panmure Gordon returns to profit in 2012
• Thomas Cook saves on fees by partially cancelling facility
• McBride warns on profit, pushes cost savings
• Arbuthnot 2012 pretax profit jumps
• QinetiQ wins follow-on contracts with Shell
• Vesuvius cuts jobs; sees lower 2013 revenue
• Ted Baker profit up 16.5 pct, says 2013 started well
• APR Energy – 2012 pro-forma pretax profit up 10% to $63.3 mln
• Premier Farnell full-year profit falls
• APR Energy profit rises 10 pct on demand from developing markets
• Vodafone announces Polkomtel partner deal
• Lamprell swings to $110 million full-year loss
• Lamprell names new CFO
• Next profit up 9 pct, quiet start to new year
• PV Crystalox sees modest market growth in 2013
• Mediterranean Oil & Gas renews Italian gas sales deal
• A.G.Barr full-year profit rises 4 pct
• Premier Oil 2012 profit soars on higher production
• United Utilities sees profit slightly higher