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

UK 100 called to open -5pts, with optimism tempered ahead of the Eurogroup meeting in Brussels, despite heightened expectations that finance chiefs/troika of bailout lenders will reach an agreement and give Greece the money it needs to avoid default and remove what has been more than a nagging doubt for some time now.

News that pro-independence parties have taken the majority in Catalonian elections sees a bigger pledge for a referendum on independence from Spain and sets up a more strained relationship with Madrid. Let’s see whether Scotland steps up its calls for something similar.

Eurozone budget talks now postponed until the early 2013 after the gulf between those wanting cuts and those wanting increases could not be bridged. Although UK PM Cameron had been singled out as the likely one to scupper talks, wanting cuts while the region’s electorate suffers austerity, it looks like he had plenty of support from the likes of German Chancellor Merkel.

After a US (and Japanese) holiday, the US Fiscal Cliff will be back to the agenda with some comments over the weekend that little progress had been made in while markets had been rallying. Bank of Japan (BoJ) minutes were more dovish than expected (now not the time to change policy), helping the Yen back off its lows of late.

The UK 100 Index remains in its bounce from 16 Nov, testing the existing 2.5-month rising below which it fell in mod-November. Greek disbursement could help the rally continue, although the negative comments on the fiscal cliff could limit this. We still believe progress above 5900 will be tempered by 11-month falling highs and thus resistance.

In FX, the GBP/USD has come off its highs of 1.605 as more questions arise over the fiscal cliff and the no more QE/ rate rises are expected by the Bank of England for a while. Whether this serves as a bullish flag before another surge higher remains to be seen. EUR/USD remains in rebound mode, with 1.30 (and late-Oct highs) not that far off. A Greek bailout payment release would likely help matters further.

In commodities, Gold has settled after its jump on Friday on USD weakness and sits at 1-month highs. Resistance emerged at mid-Oct highs.  Brent Crude seen some renewed buying, breaking back above last week’s falling highs helped by weaker USD and ceasefire tensions still high. US Light Crude also higher on weaker US dollar.

In focus today will be the Eurogroup meeting on Greece. Thereafter, German GFK Consumer confidence and US Manufacturing Data from Dallas and Chicago will provide an insight in to the state of the sector, while the nation rolls towards its fiscal cliff. Note that the US also reports its final Q3 GDP figure later in the week and expectations are for a big revision upwards. The normally volatile US Durable goods orders are seen weak, but only after a big rebound the prior month. Elsewhere in the week with European growth under pressure as austerity bites, keep an eye on unemployment figures from Germany and the Eurozone itself.

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

• Spain               Catalan Election                      Pro-Independence parties take majority
• See Live Macro calendar for all details

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

• Intertek acquires Dutch firm LSI
• Cobham appoints Senior’s Nicholls as CFO
• Tullow Oil finds oil at second onshore Kenya basin
• Ablon expects new loan documents by yr end
• Betfair to withdraw from Greece due to regulatory issues
• SDL expects year-end profit to fall short of market expectations
• International Greetings says trading in line
• Essar Energy says profit rises
• Origin Enterprises reports slower start to year
• Aberdeen Asset Mgt pre-tax profits rise to 348 mln stg
• Anglo American confirms sale of Scaw South Africa
• Cranswick H1 profit before tax up 21 per cent to 22.5 million stg