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

UK 100 called to open +10pts, finding a modicum of support following game-changing comments from the head of the Eurogroup of Finance Ministers Jeroen Dijsselbloem (followed by back-tracking) that, while Cyprus was a unique case, the rescue package involving a bail-in of uninsured (<€100K) bank depositors represents template for future bailouts.

Despite retracing his comments, the bail-in precedent has been set and the risk of bank runs and contagion stands, hence poor quality/absence of a relief rally in risk assets and the significant pressure on the single currency EUR. Banks to remain closed in Cyprus until Thursday and capital controls in place with restricted access to cash.

Chinese equities under pressure as concerns persist regarding its economic outlook as the central bank (PBOC) continues draining liquidity form the market and fears of further property market curbs. In Japan, new BoJ governor Kuroda reiterated last week’s speech about doing a Draghi (‘whatever it takes’) to hit inflation target with bold policy. Overnight data limited to an improvement in Japanese Small Business Confidence.

In the US, markets closed lower as any Cyprus relief was short-lived to say the least. While Bernanke joined peers (BoE’s King) in London for a speech on the crisis and defended easy money policy, saying mutually beneficial,  FOMC colleague Dudley said separately that QE3 here to stay for now, but potential for slowdown once economy gains momentum.

In focus today will be, surprise, surprise, the continuing fallout from Cyprus, however our macro calendar line-up offers us CBI Sales data (seen improving), US Durable Goods (seen rebounding, but a fall-back ex-Transport), US Housing & Richmond Fed (seen remaining solid), although US Consumer Confidence and New Home Sales seen ticking down a touch.

After his budget of last week, UK Chancellor Osborne spends the day testifying and then being grilled by the Treasury Select Committee.

UK 100 off its lows of yesterday following Dijsselbloem’s comments, suggesting some shallow rising support at 6360 since 18 Mar. Over the longer term, the 3-month graph maintains its upward bias, although support is lower at 6350. Resistance still likely around last week’s highs of 6480.

Gold back down around $1600, with a brief test below, despite uncertainty surrounding the Eurozone remaining elevated. US light Crude rallied to above $95 maintaining the 1-month uptrend, but we did have some intra-day volatility yesterday with highs of $95.5 and lows of $94. Similar price action in Brent Crude which trades around $108, but with continued rebound (and with similar volatility) meaning the spread between the oils narrowed to 6-month low.

In FX, GBP/USD maintains its uptrend of last 2 weeks, despite some weakness yesterday after hitting 1-month highs. Rising support from mid-March. EUR/USD fell from recovery highs of 1.30 yesterday thanks to Dijsselbloem’s comments, falling back to lows of late November, around 1.28.

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

• Japan               Small Business Confidence                 Improved

See Live Macro calendar for all details

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

• Compass sees H1 organic revenue growth at 5 pct
• Insurer Resolution raises dividend
• Faroe Petroleum full-year loss before tax 29 mln stg
• Dentsu, Aegis get Chinese regulator clearance for merger
• GVC sees Sportingbet deal growth potential
• Shell says Chinese govt approves Fushun shale gas deal
• Kingfisher year profit falls 11 pct
• GB Group says results ahead of view
• Kazakhmys takes bigger than expected $2.2 bln hit on ENRC stake
• LCH.Clearnet investors approve LSE offer
• Wolseley profit falls 20 pct on Europe weakness
• West Pioneer to cancel AIM trading
• Bellway says first-half profit rises 47.5 pct, ups dividend
• Phytopharm stopping R&D spend, cutting headcount
• ReNeuron gets okay for UK stem cell trial in limb ischaemia
• Legal and General buys rest of Cofunds Holdings for £131 mln