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

UK 100 called to open -5pts, with no handover from Asia on account of many markets being closed for the Lunar New year (Japan, China, Hong Kong). Australian equities a touch lower after Home Loans data was much weaker than expected and Investment lending remained weak, although less so than last month.

The Australian Home Loans data may serve to heighten calls again for a rate cut by the RBA, denting the AUD, while after its significant weakening of late the JPY had turned back after the Japanese finance minister said that the depreciation may have been to fast.

Other data of note overnight was the Lloyds Employment Confidence indicator which deteriorated further in January going against the unemployment data improvement seen of late although the problem of an output/productivity gap (GDP muted if not negative) remains.

US markets closed higher on Friday after better Trade balance figures and after Eurozone finance ministers meeting struck a deal on the 7yr budget on Friday. Not all satisfied, but UK PM Cameron got his wish of a reduced budget in an environment of austerity. The agenda moves on to negotiations on Cypriot rescue plan comprising discussion of forced losses on uninsured depositors as one of three options put forward to avoid a full-scale bailout after the elections later this month.

Elsewhere G20 meeting in Moscow to discuss ‘currency wars’ as countries seek to weaken their currency to help generate exports and growth, with Japan likely being top of the hit list and the Wall St Journal says US and EU discussing joint message to head of the potentially destabilizing devaluations in major currencies.

UK 100 futures remain in their down trend since beginning of month, with resistance now likely around 6280 and support likely around long term rising lows around 6160. We still see a fall to the latter (-3% from recent highs) as a healthy correction before long term uptrend resumes.

In FX, GBP/USD slowed up around 1.58 after bounce from 1.565 following sell-off from beginning of year. EUR/USD remains weak and below 1.34, but off its worst February levels registered on Friday after Draghi said he would ‘monitor’ the currency’s strength. GBP/EUR recovered from 1.15 to back above 2012 low of 1.175. Could this level revert to support?

In Commodities, Gold back at lower end of recent $1665-1685 trading range. In Oil, US Light Crude still in down trend from Feb highs of $98 and struggling to regain $96 overnight. Brent Crude retains its long term uptrend, just off its best level of $119 reached on Friday.

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

• UK                    Lloyds Employment Confidence         Deteriorated
• Aussie              Home Loans                                        Worse
• Aussie              Investment Lending                            Weak, but Improved
• See Live Macro calendar for all details

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

• Balfour Beatty appointed to 45 mln stg contract
• Telecom Plus sees FY profits in line
• Enegi Oil in N.Sea farm out deal with Azimuth
• Rolls Royce awarded $97 mln US air force contract
• Aegis pushes back Dentsu deadline to 28 March
• JKX Oil and Gas says Ukraine field reserves upgraded
• Fidessa Group 2012 profit falls 1 pct
• Rio Tinto wins ruling to keep others off iron ore railway
• Heathrow January traffic up 0.3 pct yr-on-yr
• Blinkx expects to beat full-year revenue targets
• Circle Holdings’ Nottingham NHS contract renewed
• British Land acquires Ealing Broadway portfolio
• Enquest in 145 mln stg retail bond issue
• Monitise to launch BM payments service in Indonesia
• Essar Energy reports higher refining margins for third quarter