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

 Futures are pointing to another weak European open – UK 100 called to open -30pts – with another drop in Asia sentiment as Japan’s Nikkei fell 5% further as a stronger JPY (3-week low) hit exporters, taking equity declines to 10% from highs (technical correction) as the BoJ tried again to calm bond markets as yields rallied, indicting it remains committed to lowering long-term yields to reduce borrowing costs to help inflation and the economy.

 Australia’s ASX hindered by strong data on building approvals which has seen the AUD/USD perk up ahead of next week’s RBA meeting, with expectations of another rate cut receding, exacerbated by upbeat forward capex plans negating a disappointing reading for the most recent month.

Sentiment in Asia influenced by negative handover from Wall St on growth concerns, after the OECD cut global growth forecasts for this year and next and Brussels gave in and extended deficit targets for member states to allow for an easing in austerity and focus on reforms as the region struggles to recover from the financial turned sovereign debt crisis and elevated unemployment levels hinder.

Out this morning and with potential impact on China sentiment, note that US Aluminium gain Alcoa has had its rating cut by one notch to junk status by Moody’s due to falling prices and weakening growth in China and Europe.

 In focus this morning will be Eurozone Confidence Indicators which are seen improving slightly albeit remaining depressed. Then it’s over to the US for what could really swing QE3 taper sentiment before the US open, with the second update on GDP, Consumption and the weekly jobless claims reading.

Later in her afternoon, US Pending Home Sales will also be eyed as a consumer sentiment gauge with growth seen stable in April, but the recent US bond yield rise may be more significant in terms of impact on future borrowing costs as the prospect of economic recovery leads many to factor in a slowing of yield lowering Fed intervention and potential for tightening of the loose monetary policy markets have got very accustomed to.

 The UK 100 has fallen below the lows of last week, and testing a 3-month intersecting trendline from end-Feb lows and across April highs. This takes the correction to 4.0% from 13yr highs and as discussed previously, there is still potential for pull-back all the way to 6550, even if we had anticipated that a 1/3 retrace might suffice, in-line with prior moves.

In FX, GBP/USD has broken back up above 1.515 which may recovery to support again as the USD gave up some of its recent gains helped by a 5yr Treasury auction bring market yields back from the recent spike. EUR/USD back up near recent highs of 1.30. Resistance? Support 1.285. USD/JPY making 3-week lows of 100.5. AUD/USD rebounded to prior support (RSI also corrected from oversold).

 Gold back above $1400 on weaker USD, breaking out of recent $1380-1400 range. This despite muted demand on benign inflation meaning less need for hedge and global backstops meaning  less need for safehaven.

US light Crude back down near 1-month lows of 92.5 on global growth concerns and despite weaker USD while Brent is off 3-day highs to sit in middle of 1-month $100.5-$105.5 range.

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

• Aussie              Building Approvals                  Better
• Aussie              Private Capital Expenditure    Worse
• Switz                GDP                                         Better
• UK                    Nationwide House Prices        Better

See Live Macro calendar for all details

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

• Tate and Lyle profits rise 4 pct, sees growth next year
• News Corp says will cancel standard listing on London stock exchange
• Afferro Mining – substantial increase in indicated Nkout resource
• Capital & Counties buys full control of London building for 117 mln stg
• Kingfisher sees first-quarter profit tumble
• Severn Trent FY profit misses, does not mention bid
• Tullow Oil says Ivory Coast well is dry hole
• Genel, Gulf Keystone say another Kurdistan well strikes oil
• Costain merger with May Gurney lapses as expected
• UK says may force Ryanair to sell Aer Lingus stake
• Max Petroleum says commenced drilling appraisal well in Sagiz West field