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

  UK 100 called to open -5pts, potentially taking a breather at month-end, despite Asian markets higher overnight, Japan retracing some of yesterday’s second big sell-off (correction over?), and after another positive US and European close, helped by unchanged Eurozone sentiment and US data (GDP, Jobless, Housing) seeing the QE3 taper fears dial turned down a notch

 Nikkei helped by weaker JPY (IMF says no problem in FX depreciation so long as monetary easing achieves goals at home and alongside reforms), a calmer Japanese Government Bond (JGB) market, speculation that national pension funds may change their mandate to boost equity holdings, better but still deflationary data supporting continuation of Abe-nonimcs and BoJ intervention, and other data points providing hints of economic progress.

 Overnight data included an improvement in the UK’s GFK Consumer Confidence, solid Australian Private Sector Credit and – taking the wind out of the Shanghai equities – a pull-back in Chinese MNI Business Sentiment ahead of Saturday’s official PMI data (seen down at breakeven). Elsewhere, Indian GDP increased in-line, however, concerns in Europe from a poor show in German April Retail Sales.

 After deficit target timeframes being relaxed to allow for slow up in  austerity to stop growth choke, Eurozone talk now dominated by prospect of watered down Financial Transaction Tax (FTT) and French and German leaders putting on united front on region’s recovery, the former emphasising the importance of an agreement on no treaty change for a banking union.

 In focus today, UK Net Consumer Credit (flat) and mortgage approvals (improved) which will be of interest given positive housing market data which is a solid consumer sentiment gauge. Eurozone Consumer Price Inflation (CPI) likely to have remained below target still allowing eh European Central Bank (ECB) wiggle room for a rate cut if deemed necessary.  Unemployment for the region seen ticking up again.

 In the afternoon, US Income and Spending seen slower than March, US Chicago PMI and Uni of Michigan consumer confidence have potential to decide the close of the week and month with another swing in sentiment on the Fed’s QE3 plans and thus market optimism/pessimism.

 After the UK 100 ’s bounce off 6600 and 3-month intersecting trendline, it has struggled to make much headway above 6650 and sits around that very level now. Is the correction over, or still in progress? Is current calm just down to month-end, in readiness for a fresh start in June? We’re still up for the month of May despite the volatility. “Sell in May and go away” not valid just yet. Let’s see how the summer pans out.

 In FX, GBP/USD has broken up above 1.52 to test 1.524 on reduced fears of QE3 tapering and another solid Treasury auction. EUR/USD broken up above 1.30 although found resistance at prior lows 1.305. USD/JPY still trading around 1.01. AUD/USD bounce off 2012 support 0.96 lost some momentum.

 Gold making some ground above $1400, trying $1420 overnight on weaker USD. Can completion of ascending triangle pattern see upside to $1460?

 US light Crude bounced off $91.75 lows on US data reducing QE3 taper fears. Resistance at $94. Sitting around $93.5 with. Brent also bounced $101 lows but resistance at $102.75. Both still trading in big 1-month ranges.

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

• UK                    GDK Consumer Confidence    Better
• Japan               PMI manufacturing                 Improved
• Japan               Unemployment                       Stable
• Japan               CPI                                           Better
• Japan               Industrial Production              Better
• Aussie              Private Sector Credit              Better
• China               MNI Business Sentiment         Worse
• Japan               Housing                                   Better
• India                GDP                                         In-line, Improved
• Germany         Retail Sales                             Worse

See Live Macro calendar for all details

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

• Aer Lingus says board supports pension compromise
• Llloyds sells $5bn mortgage portfolio
• Gem Diamonds says 164ct diamond sold for $9m
• Smiths Group in early-stage talks on sale of medical division for £2 billion pounds
• Bumi to apply for resumption of trading in shares before June 26
• Veolia consortium wins Thames Water upgrade deal