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

UK 100 called to open +5pts, with sentiment continuing to be pulled between mixed macro data (China +, Japan +, Germany -, US =) weighing on the already troubled global growth story. This was compounded by US industrial Caterpillar becoming the latest company to pull the emergency cord and reduce forecasts, cutting its 2015 view based on the sluggish global economy, and the head of the International Monetary Fund (IMF) warning of further cuts to global growth expectations.

Risk appetite did see a boost from the improved overnight data from China Leading Economic Index (biggest gain in 7 months) and the Japanese Small Business Confidence, however, the effects were short-term to say the least, with the excitement from central bank intervention (active and pledged) continuing to fade and worries about Europe returning to the front-line – Spain, Greece and Portugal from a political/crisis point of view, the core nations in terms of agreement/disagreement on the measures needed to stem a worsening in the periphery, and Germany from a growth perspective (contraction in Q3) after poor macro data.

If we wanted a reminder of an underlying structural problem impacting global growth (banks need capital to provide funding, to help growth etc) see the joint FT article by Swiss National Bank (SNB) Chairman Phillip Hildebrand on how “The Eurozone should fix its banks in the US way”, highlighting how the path the recovery is already likely long, but how sorting out the banks quickly can help growth and ensure that it doesn’t get longer.

The macro calendar again is light, with focus likely on the US in the afternoon with updates from the Case-Shiller house price index. Growth is seen in Jul, building on last month’s positive readings. Thereafter, US Consumer Confidence seen improving along with the Richmond Fed (yesterday the Dallas Fed improved markedly, but the Chicago Fed declined, while last week the Philly Fed made a big leap forward).

In commodities and FX, Gold saw a little rebound yesterday, and remains off its 1-week lows, as the USD continues to recover against the EUR (EUR/USD down to 1.29) as worries over the troubled region overshadow the debasing effect of a third round of quantitative easing (QE3) from the US Federal Reserve (Fed). GBP/USD remains in a tight range around 1.623, but GBP/EUR has made a new high with demand for sterling over the euro taking the pair back to late-August/early September level of 1.258.

Oil looks to have settled with US light Crude bouncing of $91 for a second time, but faces a 1-week trendline of falling resistance around $92. Brent, while off its $107 lows, also remains under pressure with a 2-week trendline of falling resistance around $110.5. Watch for improved risk appetite or US dollar weakening to help both, but geopolitical issues to keep things tight.

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

• China               Conf Board leading Econ Index          Improved
• Japan               Small Business Confidence                 Improved
• Germany         GFK Consumer Confidence                 Flat, in-line
• Switz                UBS Consumption Indicator                Declined
• See Live Macro calendar for all details

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

• Hornby warns on profit after weak Olympic sales
• Euromoney forecasts record year profit
• Daily Mail sees year in line, helped by B2B
• Regenersis says trading in line
• Cairn raises $910 mln from latest Cairn India sell-down
• Soco proposes to sell stake in Angola oil licence
• Hargreaves Services FY profit up, confident on 2012/13
• Close Brothers FY profit up 2 pct, raises dividend
• Skyepharma Submission of New Drug Application in Japan
• Sirius Minerals Sees Near-Term Upgraded Resource Estimate
• Rentokil Initial To Buy Western Exterminator For Up To $114.6M
• Diageo In Talks To Buy Stake In United Spirits
• Kea Petroleum PLC Exercise of warrants
• Mediterranean Oil & Gas H1 Pretax Profit Down
• Regal Petroleum 2012 Interim Results
• New World Oil & Gas Interim Results