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

UK 100 called to open -10pts around 6610, refusing to budge from sideways consolidation channel, Asian equities held back overnight by investors weighing prospect of reduced Fed stimulus following stronger than expected US PMI Manufacturing and Housing data and ratings agency S&P taking negative action on Italian banks and warned 27 sovereigns are on downgrade watch.

Japan also hindered by earnings season showing Canon cutting its full year sales and profits forecasts which outweighed better numbers from Facebook after the US close, as well as the fallout from the miss by Caterpillar yesterday which rekindled China slowdown fears, however weakness offset by a mini-stimulus programme (VAT cut, export help) launched by the world’s #2 economy.

Stronger Eurozone PMIs and some strong earnings on both sides of the Atlantic yesterday unable to help sentiment with QE3 taper and China slowdown fears still dominating keeping a lid on things.

 In focus today, after better-than-expected Eurozone PMI yesterday will be the German IFO Surveys which are seen remaining solidly above 100, with marginal improvements. UK GDP is seen accelerating in the first reading for Q2, albeit with growth unchanged in the Services sector in May.

 In the US, given the jitters about QE3 tapering after data turning better again Jobless Claims will be watched as usual, although expectations are for a tick up in Initial Claims after last week’s drop, but a fall back in Continuing Claims.

 The reading for Durable Goods seen showing back at more normal growth levels. Kansas Fed seen improving to breakeven. Earnings season continues with names including 3M, Colgate, GM, Xerox, Dow Chemical.

 UK 100 unmoved from its 6590-6665 range with catalysts for either a breakout or breakdown lacking as the summer hits the half-way point. As we keep repeating though, the longer the sideways move, the more energy that builds for the subsequent move. For the moment it’s still a pause with an uptrend.

 In FX, GBP/USD bounced at 1.53 overnight despite Q3 taper fears following strong macro data. Possibility for return to 1.54 and above. Rising support line intact at 1.53. EUR/USD also bounced overnight just below 1.32, with rising support also intact. Possible regain of 1.325 and higher.

 In Commodities, Gold lost momentum around $1350 as we discussed recently having rallied hard from lows of $1180 back to rallied back to an intersecting trendline of support which has now turned resistance. Still in 10-month downtrend, although 4-month falling highs have been broken (revert to support?). Narrow range $1300-1350 for the moment.

 Oils fallen back despite weaker USD as concerns on global growth emerge on China slowdown fears and some weaker earnings reports (CAT). Brent Crude lost momentum at recent highs to test lows of 11-Jul at $106.25. US Light Crude broken trend of rising lows at $106 to test $104.8 lows of 17-Jul.

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

• Japan       Corp Service Price Index    Worse

See Live Macro calendar for all details

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

• Fullers organic sales up 10 percent
• Mitchells and Butlers says to meet forecasts
• Great Portland Estates quarterly NAV rises 4 pct, maintains confident outlook
• Howden Joinery H1 profit rises, FY expectations unchanged
• Daily Mail and General Trust says Q3 revenue rises 3 pct
• Russia’s Polyus Gold H1 sales down 19 pct y-on-y
• Reed Elsevier H1 beats, reiterates FY outlook
• Workspace says Q1 occupancy up to 90.4 percent
• Marston’s Q3 sales rise, says disposals ahead of target
• Kentz wins contract in South Africa
•  Lancashire says Q2 pretax profit down to $58.3 mln
• Unilever’s Q2 sales growth misses forecasts
• Nichols H1 pretax profit up 9 percent
• QinetiQ maintains full year outlook, says US still challenging
• SSE says to pay above-inflation dividend in 2013/14
• A.G.Barr sees first half sales up 4.9 pct
• Platinum miner Lonmin says Q3 production dips, keeps guidance
• Halma – Q1 revenue rises 13 pct
• Bodycote H1 pretax profit rises
• Travis Perkins says CEO Geoff Cooper to step down Jan 2014
• Britvic Q3 revenue up 4 pct, sees earnings at top of range
• Travis Perkins H1 profit up 4.1 pct
• Invensys says trading ‘solid’ as talks continue with Schneider
• Shanks says Q1 trading in line with expectations
• Capita H1 profit up 10 pct, confident on 2013
• Johnson Matthey says Q1 profit up 8 pct
• Kazakhmys Q2 copper production ticks higher, sticks to target
• BT snaps up sports customers to boost Q1
• Rolls-Royce’s cost, cash performance “unacceptable” – CEO
• Cable and Wireless Communications says trading in line with expectations
• Daily Mail Q3 revenues rise on MailOnline boost