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

  UK 100 called to open +15pts with a positive handover from Asian bourses (Japan’s Nikkei closed) after from the flat/positive finish on Wall Street amid lots of Fed talk (for and against tapering) adding to the mix following Bernanke’s dovish comments, and more importantly after overnight Chinese Q2 GDP of 7.5%, albeit slower than the 7.7% in Q1, was in-line with expectations – markets suggesting relief that it wasn’t any weaker.

 Elsewhere in the Chinese data dump (Industrial Production, Retail Sales, Investment) note most figures in-line to a touch lighter, confirming the inevitable slowing of the world’s #2 economy. Comments from the PBOC (central bank) maintain that monetary policy is reasonable to control money and credit.

 Note continued stress (political, monetary, economic) in Europe’s periphery with bond yields on the likes of Portugal and Spain implying the countries having to pay more to borrow and thus finance themselves. After speculation on Friday, ratings agency Fitch downgraded France to AA+ from AAA (outlook stable), highlighting the woes for the whole region and effects of a troubled periphery on the core.

 Other data of note overnight included a slowdown in UK House Prices on a monthly basis but an acceleration over the year, while Aussie New Vehicle Sales accelerated.

 In focus today will be the fallout and digestion of the Chinese data and while there may be concerns the official target will be missed and a potential lower rate of growth, there is no real surprise as we get used to the emerging giant’s growth having to slow up after years of strong expansion and the volume of economic data retains the potential to conflict from one week to the next.

 In the afternoon, US Empire Manufacturing, Retail Sales and Business Inventories will be eyed for more hints on the US economy especially after Bernanke’s recent dovish and rally-inducing comments.

 The UK 100 continues to trade around the 6550 taking a pause after the 10.5% recovery from the end-June visit of near 6000. A rising trendline of support from 5-July remains intact offering potential for a return to the mid-May highs helped by continued hopes that the US Federal Reserve remains highly accommodative for a while longer.

 In FX GBP/USD traded back down towards 1.51 after the bounce from March lows of near 1.48 with the Bernanke no-taper bounce having lost some momentum. Falling highs from mid-June intact. EUR/USD remain flat around 1.305 with the trade-off of a weaker USD on no taper competing with Eurozone woes, but bounce broken downtrend from mid-June.

 In Commodities, Gold still struggling to get back above $1300 despite the weaker USD vs GBP and hindered by the flat EUR/USD.3-month downtrend, but bounce from end-June still in-tact, following equity market rally (safehaven?). Oil remains in up-trend with US Light Crude nearing $106 and rising support around $105. Brent Crude broken above $108 to make new 1-month highs.

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

• UK            House Prices                                   Mixed
• Aussie      New Motor vehicle Sales                Improved
• China       GDP                                                 In-line
• China       Industrial Production                      Mixed
• China       Retail Sales                                     Mixed

See Live Macro calendar for all details

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

• Thorntons says Q4 total sales rise 5.6 pct
• Pursuit Dynamics buys gaming firms in company shake-up
• FD Lowth to join BG Group from AstraZeneca
• Salamander Energy says Rayong well is dry hole
• Interserve acquires Topaz oil and gas for $46m
• Prosperity receives offer from PIHL