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

UK 100 called to open +20pts, after a quiet Asian session on account of today’s US Thanksgiving holiday and Japan closed tomorrow for Labour Thanksgiving public holiday, but with risk sentiment higher after the China HSBC PMI Manufacturing improved to growth territory. The Japanese Nikkei equity index continues its strong gains and its currency, the Yen (JPY), continues to weaken on hopes of QE after December’s election.

The Chinese manufacturing data shows the first expansion in the reading in 12 months, and refuels hopes that the nation has bottomed out in terms of any growth slowdown, and averted the hard landing we had all feared. Could this see China take up the slack from a slowing Europe, helping out with global growth?

Despite a lack of data yesterday, on account of the slower Thanksgiving week, US PMI Manufacturing expansion supported risk appetite, as did US Jobless in-line (although likely impacted by Superstorm Sandy) and despite coming in lower than the preliminary reading the Uni of Michigan Consumer Sentiment was little changed in November, near a five-year high.

News that a ceasefire had been negotiated in Cairo between Israel and Hamas, hopefully seeing an end to the conflict cantering on the disputed Gaza, has also reduced some of the risk associated with the Middle East. Note however that the situation remains tense and complex, with claims from Tel Aviv that there have been continued rocket attacks and Hamas saying ceasefire only valid if all Gaza crossing opened. Watch the price of Brent Crude Oil for continued volatility.

Sentiment also solid despite moving from one Euro meeting to another. The first saw failure/postponement of decision on disbursing Greece the money it needs based on disagreements among lenders regarding its debt reduction schedule. Germany still against write-downs on Greek debt, but optimistic of deal next Monday after technical details agreed upon. The IMF still sees Greece needing another 2yrs to reach targets. Another key weekend of waiting.

The second meeting, today, sees UK PM Cameron at odds with Europe on increasing the region’s budget over the next 7 years despite austerity in place in many member countries in response to the debt crisis, but especially with the UK being a net contributor to the region.

The UK 100 Index has moved about that 5750 level and is closing in on 5800. Continued good news could easily see index regain its recent highs. Greek disbursement. Eurozone budget cuts. US fiscal cliff progress. Middle East ceasefire. Having cleared, 5750, this could revert to support. Although keep an eye on Eurozone data today. No growth forecast.

In FX, the GBP/USD has come off its highs of near 2-week highs of 1.60 with no colour from the Bank of England (BoE)’s latest MPC minutes on more QE, and no rate cut in foreseeable future helping GBP. This combined with the US fiscal cliff approaching and open-ended QE keeping the USD weak and thus supporting the major currency pair.  EUR/USD trading in a similar fashion (3 week highs) with some optimism on Europe and fears over US.

In commodities, Gold still in 3-day range around $1730, but off week-lows helped by USD weakness. Brent Crude trading in more volatile fashion given complex Middle East situation and fears of supply disruption. Falling resistance from $112. US Light Crude off yesterday’s highs despite weaker USD and still bang in the middle of recent $85-90 range.

In focus today, will be the raft of PMI data from Europe, with on German Services anywhere near breakeven in terms of growth/contraction. Any advances likely towards less contraction likely to be taken positively. UK CBI trends will be of interest for the UK high Street players. Eurozone Consumer Confidence seen pretty much flat. The Eurozone budget summit begins later in the day.

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

• China               HSBC Flash manufacturing PMI          Recovery to growth
• See Live Macro calendar for all details

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

• Close Brothers says NIM reduced since last financial year
• Mothercare narrows losses as sales improve
• Morgan Sindall increases investment in ISIS
• RSA names new chairman
• Grainger Gross NAV p/share up 3.2%
• C&C to acquire Irish distributor for 12.4 mln eur
• Young’s H1 adjusted pretax profit rises 11.2 pct
• Helical Bar NAV p/share up to 252p, year profit up 27 pct
• SABMiller first half profit rises 12 percent
• Daily Mail and General Trust FY profit before tax up 10 pct to 255 mln stg