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

UK 100 called to open +40pts after US markets closed lower for their long weekend and Spanish troubled financial Bankia gave in to pressure to request more state aid, taking the government’s stake to around 90%. Lingering fears over Greece and contagion in the financial sector also helped kept bulls on a tight leash.

Overnight in Asia, however, risk-on has been the direction of choice with major bourses showing green thanks to encouraging news from Europe over the weekend. Greek election polls suggest that the pro-bailout parties may have regained the lead.  This is good news, but remember that even they couldn’t form a coalition after they got most votes in first election. There was also reports of a ‘secret’ rescue found for Europe’s weakest banks being in the making.

Markets likely quiet today on account of it being Whit Monday or Pentecost Monday on the continents, observed as a national holiday in many countries in mainland Europe. At the same time, US markets are closed for Memorial day. Macro data is thus understandably very light, but we do have an Italian bond auction which could provide some spice given the rise in yields of late.

The rest of the week is sure to focused on Friday’s US Non-Farm Payrolls, after two months of poor figure following the good end to 2011 and start to 2012. A miss will confirm a ‘soft patch’ but it is the US Fed’s reaction which will be key. Could this push them to more QE, given the ongoing weakness in Europe? Elsewhere we will look to US GDP on Thursday, then Chinese PMI Manufacturing, Eurozone unemployment and US ISM Manufacturing on Friday.

For more on the week ahead, listen to my telephone interview with Swiss FX house Dukascopy from last Friday (link)

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

• UK                    Hometrack Housing Survey    Improved
• China               Industrial Profits YTD              Contraction accelerated
• See calendar or all details

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

• Oil and gas sectors power Aveva profit lift, raises final dividend 14%
• 888 pays 8.7 mln euros to settle Spanish tax bill
• Valiant Petroleum says to carry out more tests on Tybalt find
• Rolls Royce wins UK transport and tanker fleets deal
• Ithaca Energy says Athena field produces first oil
• Diageo buys Brazil’s Ypioca brand for £300m
• Gulf Keystone continues to talk to bidders on Akri-Bijeel sale
• Salamander sees successful appraisal of Tutung alpha-3

 Morning Press Selection:

• Spain weighs Bankia debt issue – FT.com – Banks http://on.ft.com/KTVs59
• Draft EU report attacks Italy on economy – FT.com – Europe http://on.ft.com/JOb4Vz
• Greece warned of public finances collapse – FT.com – Europe http://on.ft.com/KUWrp8
• Swiss eye capital controls if Greece goes – FT.com – Europe http://on.ft.com/K4lffd