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

  UK 100 called to open +20pts at 6115, after a largely positive session in Asia overnight, helped by a green close for US bourses on strong macro data, although global sentiment still a bit unsteady on China money market fears with yesterday’s Shanghai rebound on the PBOC comments (backtracked on hardball liquidity assistance; helped certain institutions to stabilise things; seasonality to blame) proving short-lived.

 Hong Kong and Australia higher on calmer China, and hopes for the world’s #2 economy’s money markets to normalise next month as suggested by a Chinese news article, but Japan’s Nikkei under pressure as JPY weakness slows, up denting exporters.

 Australia helped by upgrade to iron ore export forecasts, however, precious metals slapped by prospect of less QE, notably after the strong US macro data yesterday – Gold & Silver testing September 2010 levels.

 Still lots of dovish tones from central bank officials (ECB, BoE) that normalisation of monetary  policy is a way off yet and that markets have over-reacted to the Fed comments about tapering and end of QE3 with much focus on demand still being weak and any timetable being data-dependent and thus subject to change. Does this signal that the desired market correction has been delivered?

 Overnight, macro data limited to German Consumer Confidence and Swiss UBS Consumption Indicator which both ticked up. Lots of coverage of Italy facing multi-billion euro hits from derivatives contracts – used to help gain accession to single currency – which have gone sour after being restructured at height of crisis.

 In focus today will be the French GDP which is seen being confirmed at a recessionary -0.2% QoQ and -0.4% YoY in Q1. In the US GDP is seen a bit more in-line with Fed Chairman Bernanke’s optimism, with growth of 2.4% annualised in Q1, and Personal Consumption at 3.4% showing consumer confidence.

 ECB president Draghi speaking just after European markets open, while the Bank BoE releases is financial stability report and Chancellor Osborne releases the UK government’s spending review. With all the focus on Fed speak, Fisher and Lacker talking this afternoon, the former having criticised markets for pressuring Bernanke to keep the QE3 train at full throttle.

 UK 100 found support at 6000 and rebounded to break above falling lows from 19 Jun and regain 6100. Little progress overnight, but this could bode well in terms of a platform for a further move up to the 6200 level we could like to see before getting excited about any recovery towards the levels abandoned in late May.

 Our weekly graph shows nice potential hammer candlestick (tried lower but recovered) and support at 6,000 (highs of early 2012), although still 6 weeks of decline, while Monthly graph looks like a reversal of the 4yr uptrend, and looking nasty it has yet to breach the rising support.

 In FX, GBP/USD sound support at 1.54 overnight although still in downtrend from 1.575 highs. EUR/USD still in downtrend and back testing 1.305 likely on Italy derivatives fears. Strong US data still putting pressure on EUR and GBP in terms of potential end of QE3. USD/JPY back below 98 having tested 98.5, with Asia fears (China) seeing JPY safehaven seeking despite USD strength. Support at 97 though could be pause before another up-leg. Watch for break of 98.5 again.

 Gold tested September 2010 levels of $1250 with continued lack of interest from a bullish perspective. Was the pause at $1300 just half-way house for the fall from $1400. As we pointed out recently, $1150 could be the next stop. As we also pointed out yesterday though, while the falls are linked to USD strength and liquidation of holdings on lack of need for hedge/safehaven, beware increased short speculation would could lead to a short squeeze.

 For any help you may require placing trades or in terms of market information, put a call in to our trading floor – all part of the service.

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

• Germany         GFK Consumer Confidence                 Improved
• Switz                UBS Consumption Indicator                Improved

See Live Macro calendar for all details

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

• Great Portland Estates JV sells Park Crescent West
• Monitise partners Lloyds Bank in mobile solutions
• Insurer Direct Line to cut about 2000 jobs
• Afren announces oil discovery offshore Nigeria
• ITV repurchases 28.9 lmn stg of convertible bonds
• Bunzl posts H1 underlying revenue growth of 2 pct
• British Airways launches $927 bond issue
• Balfour Beatty sells interest in Exeter airport
• Hansteen launches 100 mln eurs bond offer
• Lekoil discovers oil in offshore Nigeria well
• Legal & General buys Lucida for 151 mln stg
• Stagecoach full-year profit rises 8 pct