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

UK 100 called to open +30pts with Cyprus dominating the news for a second Monday but this time potentially with a deal on the table after a bailout agreement was reached late last night and ahead of today’s ECB emergency liquidity cut-off for the banks and last-week’s hurdle of parliamentary approval not being required to be cleared as deal billed as restructuring rather than tax/levy. Periphery note; rules can always be changed.

The deal will see the setting-up of a ‘good’ and ‘bad’ bank with the wind-down/closure of Laiki Bank (all bond holders wiped out) and transfer of its sub-€100K depositors to the Bank of Cyprus and potential haircuts on those with >€100K deposits (~€4.2bn). At Bank of Cyprus, >€100K depositors frozen amid banks restructuring. Banks remain closed.

The bank deal allows the Troika to release the €10bn its promised last week to go alongside the ‘self-help’ measures imposed on the island’s banking sector, which gained its attraction over the years thanks to light touch regulation. It also means the Troika’s hardball ‘Cyprus project’ has paid off with it not paying more than promised last weekend.

Asian markets higher on the prospect of a deal being struck and the Eurozone crisis calmed, although the risk that bank deposit guarantees are ignored elsewhere remains a threat in the periphery. In fact, Spain may already be looking into it. Ratings agency Moody’s says Cyprus still at risk of default still and bailout credit negative for Eurozone as an entity.

Troika (EC, ECB, IMF) relationship being stated as strained as will those between Cyprus and Russia (the latter helping out with a loan recently which still needs restructuring, and many of its nationals having money parked there). Island dynamic also to change as banking sector potentially loses its appeal to outsiders and becomes a less important island employer.

Japan’s Nikkei benefiting from weaker JPY with traditional safe havens losing their attraction after Cyrus deal and PM Abe saying recent FX moves positive for the troubled economy and reiterates 2% inflation goal and pursuit of aggressive monetary easing.  EUR/USD has rallied after being under pressure into the weekend.

In focus today, we have a limited macro line-up, and the focus set to remain Med and Eurozone-oriented. Data-points include UK Home Loans (seen up a touch; quasi consumer confidence), US Chicago and Dallas Feds (with the latter seen improving).

UK 100 down off its lows of late on prospect of a Cyprus deal. Highs of Thursday (6435) still need to be cleared before resistance of early last week around 6480 can be tested. Long-term 3-month uptrend still intact with support (6350).

Gold off its best levels on Cyprus deal, but $1600 still available. US light Crude rallied back towards last week’s highs above $94. Brent Crude also off its worst levels and broken last-weeks trend of falling highs.

 In FX, GBP/USD maintains its uptrend of last 2 weeks, clearing the 1.52 level. EUR/USD rallied on bailout news to above 1.30, but back flirting with the level now.

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

• UK        Hometrack Housing Survey    Improved

See Live Macro calendar for all details

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

• Aberdeen reports 3.5 bln stg in net inflows
• Vodafone’s Colao scans Verizon for U.S. solution
• CVC, RBS exit Samsonite with $528 mln stake sale-terms
• Avocet Mining completes deal to reduce hedge burden
• Schroders agrees 424 mln stg deal for Cazenove
• Centrica signs North American LNG export deal with Cheniere
• AstraZeneca settles Crestor patent row with generics firms
• Sunrise Resources gets positive results from diamond project
• Afren FY pretax profit soars, reserves grow
• Finsbury Food says outlook remains strong
• Diploma estimates first-half revenue to grow 10 percent
• Afren to buy additional stake in FHN, deal to boost reserves
• Wood Group unit wins Australian contract extension
• Hochschild secures $140 mln loan for Inmaculada project
• Indept News & Media refinancing talks continue
• 3i Infrastructure sells stake in Alpha Schools
• Daily Mail underlying 5-month revenue up 2 pct