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

UK 100 called to open flat, after another quiet Asian session on account of the US Thanksgiving holiday (US markets closed) limited newsflow and Japan’s Nikkei equity index closed for Labour Thanksgiving public holiday.

Like yesterday, however, the one piece of data that did emerge was from China. And again it was positive, with the Flash Business Sentiment Indicator improving (3^rd month in a row) to well above 50, implying better growth.

The better Chinese figure follows the improved HSBC Manufacturing PMI yesterday and adds weight to the possibility that the nation’s slowing growth has bottomed out and that recovery could be on the horizon. It also adds to the offsetting of Europe’s PMI data yesterday which while better than expected in many cases still signal contraction in Q4, before a possible rebound in early 2013.

Eurozone budget talks will continue today (likely heated, with UK PM Cameron leading the calls for cuts) with fresh proposals to be discussed today, although it would looks like this involves reallocation of funds rather than cutting the overall budget despite the region’s population suffering austerity programme and flagging growth.

German Chancellor Merkel added to the fray by suggesting uncertainty on progress and potentially no agreement until next year. Net beneficiaries not happy with having subsidies cut. Net contributors not happy having to stump up more (or even the same).

The Greek bailout money disbursement remains taught, even if the Eurozone 7yr budget summit and threat of the UK standing firm and vetoing is dominating the headlines, with Germany reiterating opposition to a haircut on Greek debt held by the public sector which would allow it to achieve its sustainability target (deficit to GDP by 2020).

The ceasefire between Israel and Hamas brokered in Cairo looks to be holding, seeing some calm restored to the Middle East both in the geopolitical and commodities arena (Brent crude off its highs), although sceptics are asking for how long it will last, with the situation remaining tense.

After his dovish comments weakened the Yen (JPY) to 7.5 month lows and pushed the Nikkei to 7-month highs, the Japanese opposition leader Abe, widely expected to win December’s election, changed tone slightly (not thinking of FX intervention) seeing the currency strengthen pull back slightly.

The UK 100 Index reached 5800 overnight, which could see 5790 revert to support, and providing the platform for a regain of 5900 (already bounced 200pts from lows). Greek disbursement. Eurozone budget cuts. US fiscal cliff progress. Middle East ceasefire. All can be drivers of further gains, although progress above 5900 will be tempered by 11-month falling highs and thus resistance.

In FX, the GBP/USD rebounded from yesterday’s lows, testing 1.596 overnight. Still in 7-day uptrend. 1.60 on the cards? EUR/USD still powering higher (8-day uptrend), regaining 1.29 for first time since early November.

In commodities, Gold still trading in very tight range $1728-1732 despite USD renewed weakness. Note week highs of $1735. Brent Crude displaying 5-day falling highs from $112 as ceasefire announced, but still shows rising lows through $111. Which will prevail? Middle East situation still very complex. US Light Crude off shows narrowing range into $87 (US holiday not helping), but with rising lows from $85 helped by weaker USD.

In focus today, will be German IFO surveys which, on the back of the contractionary but improved PMI data yesterday may provide more colour on any rebound in early 2013 The Eurozone budget summit, and speculation on the Greek debt discussion (reconvening on Monday) will likely attract attention elsewhere during what will be another quiet session on account of US ½ day.

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

• China               Flash Business Sentiment        Improved
• Germany         GDP                                         In-line
• See Live Macro calendar for all details

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

• Kazakh miner ENRC bolsters chairman’s role
• Gulfsands Petroleum to buy extra Tunisia, Italy stakes
• Petroneft Resources says Arbuzovskoye well 109 completed
• Hochschild expects Inmaculada and Crespo projects commissioning in H2 2014
• Desire Petroleum says report confirms licence potential
• Future full year operating profit up 26 pct
• Fuller Smith & Turner H1 pretax profit rises
• Severn Trent wants Ofwat proposals modified
• Xstrata says first production line at Koniambo complete