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

UK 100 called to open +25pts, on hopes for central banks will stimulate their ailing economies. While the European Central Bank (ECB) left rates on hold yesterday, it said it stands ready to act and talked of downside risks to economy leading some to expect bigger action next month, after the Greek elections and both the G20 and EU summits.

Today we have the Bank of England (BoE) decision on rates and Quantitative Easing – last time the decision was balanced. US Federal Reserve (Fed) Chairman Bernanke might give more hints on his plans today in his testimony to congress (more QE?), this after a trio of officials talked of risk to economic health. It’s also been a couple of weeks that speculation has been mounting that China would open the flood gates. Will US have to act first as other delay? Any action would likely give quite a boost to risk assets (equities, commodities), but coordinated (or simultaneous) central bank action would be more powerful.

News that Europe was considering a less onerous (limited conditions, less oversight) Spanish bailout programme also boosted sentiment after weeks of discussion of Eurozone collapse and slowing world growth. It also supported ECB President Draghi putting the onus on Eurozone (EZ) nations to sort out its mess (“most of Eurozone problems nothing to do with monetary policy”).

Expectations of more QE for the US dented the US Dollar (USD) (helping commodities), while the ECB’s inaction (coupled with the talk of a Spanish bailout) worked in favour of the euro (EUR). Gold maintains its rebound while Brent Crude Oil has regained the $100/barrel level.

Overnight, macro data largely positive with UK retail and Australian employment beating consensus (makes sense after better Aussie GDP yesterday). This morning, French and Swiss unemployment has been mixed. Asian markets up for their third consecutive day joining European and US markets (biggest gain of year) in their bounce higher amid hopes of policy makers taking steps to bolster growth.

Macro data today will focus on the central bank communications (BoE, US Fed) for hints on more easing. Spain’s bond auction will be of interest with 10yr yields already worryingly high. US jobless will also be looked to for clues on the health of the nation’s economy and strength of its recovery.

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

• UK                    BRC Sales                                Better
• Aussie              Employment                            Better
• France             Unemployment                       Worse
• Swiss                Unemployment                       Mixed
• See Live Macro calendar for all details

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

• Vodafone and Telefonica to spur 4G with shared UK grid
• Viterra says ACCC approves deal with Glencore
• Johnson Matthey profit jumps, pays special dividend
• Tullow Oil says makes oil discovery in Ivory Coast
• Betfair awarded Spanish online gambling licences
• Circle Oil FY sales rise
• Int’l Ferro Metals says furnace ramp-up on track
• Anadarko announces light oil discovery offshore Cote D’Ivoire

Morning Press Selection:

• Europe weighs up limited Spanish rescue – FT.com – Europe http://on.ft.com/L3b8Ea
• Bondholders look for word of more Fed help – FT.com – US Economy http://on.ft.com/JME54P
• Brussels looks to bank investors not taxpayers – FT.com – Europe http://on.ft.com/Lb0HPg
• Fed officials look to easing option – FT.com – US Politics & Policy http://on.ft.com/LrttvG
• Germany: A lonely path – FT.com – Analysis http://on.ft.com/JMD0tG
• Hard landing fear tests faith in China – FT.com – Emerging Markets http://on.ft.com/KFMpIT
• Fed risks diminishing returns with more QE – FT.com – Markets http://on.ft.com/MFSAhv
• Eurozone ills need ECB monetary tonic – FT.com – EU Economy http://on.ft.com/LtM7za