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

  UK 100 called to open flat around 6610, with Asian markets in the red overnight in response to the China HSBC PMI Manufacturing figure posting a surprise fall, intensifying worries of the economy slowing. The number suggests the recently weaker GDP may see worse to come, and undoes yesterday’s soothing words from officials about GDP being at least 7% in 2013.

 Sentiment still marked by prospect of slower growing China and surprise slump in US manufacturing data from Richmond Fed yesterday.

 Overnight data showed the Japanese Trade Balance improving, but not as much as expected (exports slowed, imports rose), while better Australian Core CPI made up for weaker headline. The latter, while initially benefiting AUD, was countered by the China disappointment. Chinese equities, especially banks dented on talk of land reform to accelerate urbanisation.

 US markets close mixed, although the Dow benefited from results from DuPont and United Utilities. Apple Shares +5% after hours; Q2 results showed better iPhone sales than expected (+20% YoY, helped by developing market, but China -14%), revenues flat but a sharp drop in earnings (gross margin dented heavily). Profits not as low as analysts expected but guidance below consensus.

 As European woes persist, note a letter to Germany from the EU that it can’t confirm Greece fulfilled all preconditions required for the next bailout. Spanish PM Rajoy may also be closer to the exit, with the slush fund issue weighing heavily. In the US, with Bernanke’s tenure coming to an end in January, US Economist Larry Summers now a strong contender for Fed Chair.

 In focus today we have Eurozone PMI Manufacturing and Services (flash readings) from Europe which are unlikely to provide much more cheer than last month, still struggling below the 50 breakeven level. UK CBI Trends seen improving in July. US PMI Manufacturing seen remaining healthily above 50, while US New Home Sales should be higher than May, albeit with a slower growth rate. Results-wise, Q2 updates from US majors Pepsico, Ford, Boeing, Caterpillar and Visa.

 UK 100 still sideways with resistance at 6660 for a third time yesterday. Uptrend still intact, but pause taking its time for a proper breather (2 weeks) increasing potential for a second leg higher to May’s 6875. Support 6580, 65550, 6520.

 In FX, GBP/USD fallen back from close visit to 1.54. Rising support line intact at 1.53. Potential upside to 1.575 June highs. EUR/USD also still in uptrend with potential upside to 1.34, although Eurozone woes at odds with falling QE3 taper/rate hike fears. Support 1.315.

 In Commodities, Gold made it as high as $1348, which is a touch higher than the 1340 where we though resistance might kick in given it was the lows of April/May. Oils lost momentum with Brent slowing at $108.5, although support $107.5. For US Light Crude, still in uptrend with support $106 Resistance $108.5.

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

• Japan       Trade Balance                    Worse
• Aussie      CPI                                       Worse
• China       HSBC PMI Manufacturing  Worse

See Live Macro calendar for all details

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

• British Land interim dividend up 2.3 percent
• British Land invests 512 mln stg as confidence picks up
• Entertainment One sees FY earnings in line with its expectations
• Tate and Lyle says Q1 profit in line, leaves year outlook unchanged
• Compass Q3 organic revenue up 4.0 pct
• Petrofac President and Executive Director Semaan to retire
• Barratt Developments makes progress with British Land, L&Q London JVs
• International Ferro Metals quarterly production climbs
• Renishaw reports fall in full-year profit
• Aquarius Platinum says attributable production climbs in June quarter
• Aquarius Q4 production climbs despite “difficult” environment
• IQE expects H1 revenue of 63 mln stg
• EasyJet revenue up 10.5 pct, guides for strong full-year
• APR Energy says first-half revenue at $87.2 million
• National Express H1 profit dips
• Morgan Advanced Materials sees potential for modest revenue growth in second half
• Kingfisher’s UK sales return to growth
• Jd Wetherspoon nudges up full-year expectations
• Chip designer ARM Holdings beats in Q2 on strong licensing
• Talktalk Telecom Q1 adds customers in Q1