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

UK 100 called to open +30pts at 6550, continuing the rebound from mid-summer lows. Note however that the breached 6560 level remains to be beaten following the breakdown on Wednesday and after a failed attempt yesterday, before confidence can be had in any recovery to the 6700 summer highs.

Asian markets quiet after a busy weak, with more Chinese data showed CPI unchanged and an improvement in PPI weakness, even if not as much as consensus expectations. Industrial Production accelerated while Fixed Asset Investment was solid as were Retail Sales. After the improved trade data yesterday, the data flow continues to allay slowing growth fears (miners to benefit again?).

Australian equities weak despite the China data on account of the RBA trimming its growth projections but left inflation projections unchanged and not joining the forward guidance club. Japan’s Nikkei positive on uptick in USD/JPY (weaker JPY) and despite a fall in Consumer confidence.

US markets closed higher on light newsflow and thin volumes with average US jobless claims data continuing to improve and a fall in mortgage delinquencies to 5yr lows and despite more taper talk from Fed officials.

In focus today will be the fallout from the Chinese data, updates on French Industrial and Manufacturing in light of improvements in UK and Germany. The UK Trade Balance seen largely unchanged but could still move GBP, while Construction output is seen mixed. The week closes with US Wholesales Sales and Inventories.

The UK 100 still trying to get back above 6560 to get some momentum behind the recovery from mid-summer lows 6470. Failure to make a breakout of this level and then the falling highs from 1 Aug could prove problematic, although the rising lows from Wednesday is a good start. We’ve had our >3% correction, can the uptrend resume? Or is this another bull trap?

In FX, GBP/USD slowed up around 1.553 at 200-day moving average, 50% retrace of the fall since the beginning of the year and trendline of falling highs. Pair benefiting more on potential for BoE to tighten before 2016 which is trumping talk about Fed tapering in September. Support 1.54. EUR/USD rallied to 1.34 near the 1.342 highs of early June. Can it better it? USD/JPY still below 97, but off worst levels of below 96.

USD Basket (vs. majors) back above 81.0, but still in downtrend as majors gain (AUD on China data, JPY on no policy change, GBP on BoE forward guidance, EUR on improved PMIs) all competing against Fed taper talk which should be strengthening the greenback. The trouble is, it’s all relative.

In Commodities, Gold regained $1300 on weaker USD and some likely some short-covering but still has two-weeks of falling highs to break. Oils off their worst levels (1-month lows) but still in downtrend from 2 Aug on concerns over global growth, less inspiring stocks data and lower shipments on account of shale boom.

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

• William Hill bets $100 mln on Australian online bookmaker
• Tesco pulls back in China with Vanguard deal
• Catlin Group reports 12 percent increase in net premiums earned in first half
• GDF buys Balfour Beatty’s UK facilities unit
• Firstgroup is subject to bid speculation worth 160-170p p/share
• Phytopharm says year started in line with expectations

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

• Japan       Tertiary Industry                             Beat
• China       CPI                                                   Miss
• China       PPI                                                   Miss
• Japan       Consumer Confidence                    Miss
• China       Industrial Production                      Beat
• China       Fixed Asset Inv                                Beat
• China       Retail Sales                                     Mixed

See Live Macro calendar for all details