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

UK 100 called to open -20pts, with a pullback from yesterday’s strength (derived from fiscal cliff progress comments, US housing data (6yr high) and Eurogroup meeting optimism) following overnight news that ratings agency Moody’s has removed France’s coveted AAA credit rating, downgrading it by 1 notch to AA1 and maintaining the Negative outlook.

While the move was speculated in the French press (Le Figaro) and brings the ratings agency in-line with peer S&P, it is a harsh reminder of the trials facing even Europe’s core, ahead of another key Eurogroup meeting today at which it was hoped we would get news that Greece is set to receive the tranche of aid it desperately needs.

In Asia, we had dovish minutes from the Royal Bank of Australia (RBA), which dented the Aussie dollar (AUD), with board members considering further policy easing (although hotter Q3 inflation will likely keep them holding off). The Japanese ruling party defended the Bank of Japan’s (BoJ) independence ahead of an election next month where the opposition is favourite and favours unlimited easing (QE).

Macro data overnight, saw the BoJ leaves rates unchanged and no new easing steps announced after recent increases. Chinese Foreign Direct Investment (FDI) fell a touch versus an expected small rise, although it is an improvement on the big fall in September. Japanese industrial data was less weak than expected, while Germany Factory gate prices were a touch weak – not good news for the key exporting nation.

While optimism may be high that the Eurogroup meeting provides Greece with an early disbursement of its aid, there are reports that the troika of lenders may hold off until the end of the month due to the on-going disagreements between the IMF and EU. This is nothing out of the ordinary, with French and German finance ministries playing down hopes of a deal in the now-traditional pre-meeting dance.

Potential good news from the Middle East with that plans for a Gaza ground offensive have been put while ceasefire efforts are stepped up with renewed talks between Israel and Hamas. This could dent some of the strength in Brent Crude that we have seen of late.

The UK 100 Index has made a decisive bounce from 5600 but found resistance at 5750 which may key the trend of falling highs from 8-Nov in place. This could see a further return to the 5600 level (bad news from Eurogroup meeting?) where it would coincide with long-term (multi-year) rising support and provide a renewed platform for recovery.

In FX, the GBP/USD trading sideways around 6-day highs of 1.591 while EUR/USD continues to try higher, trading at 1.28 properly for the first time in 9 days. In commodities, Gold found resistance around 1-month highs of $1735 after a stellar rebound from near $1700 earlier in the month. US Crude still range-bound at $85. Brent supported by Middle Eastern unrest leading to fears of supply disruption, although resistance looks to have emerged around $110.

In focus today, will be more US housing data which could provide further momentum to global markets if contraction comes in nearer to breakeven,. There Bank of England (BoE) after holding fire last month. Clues on its effectiveness will be key. Thereafter, all eyes will be on the Eurogroup meeting and US Federal Reserve (Fed) Chairman Bernanke’s speech in the evening.  Keep an eye out for Hewlett Packard Q4 results too given its likely signals on industry spending and vision on any economic slowdown.

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

• Japan               Interest Rates                                      Unchanged
• China               Actual Foreign Direct Investment       Worse
• Japan               All industry Activity Index                   Better
• Germany         Producer Prices                                   In-line
• Switz                Trade Balance                                     Better
• Switz                Exports                                                Plunged
• See Live Macro calendar for all details

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

• BSkyB to raise around $797 million in placing
• Arbuthnot Banking to raise 20 mln stg through placing
• British Land profit rises
• British Land says John Gildersleeve to become chairman
• British Land secures two new London lettings
• Morgan Sindall wins 42 mln stg projects
• Enterprise Inns profit in line, sales improve
• Hornby says FD Andrew Morris to step down next year
• Telecom Plus H1 pretax profit up 8.7 pct to 12.1 mln stg
• Homeserve revenue up 8 pct on international growth
• AZ Electronic to invest $7 mln in France facility expansion
• Premier Foods to cut 900 jobs in breads division
• Halma first-half adjusted pretax profit rises 6 pct
• EasyJet full-year profit up 28 pct
• Russia’s X5 posts $12 mln Q3 net profit, misses f’cast