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

UK 100 called to open -75pts with risk assets likely taking another hit, making it a highly volatile week after US and Asian markets maintained their declines thanks to Eurozone fears (speculation of banks runs in Greece and Spain, contagion from Greece collapse), weak US macro data and talk of Chinese growth slowing. G8 summit to offer any solutions?

US equities were already on the back foot after a poor set of US macro data (Initial Jobless, Philly Fed, Leading Indicators), however, this was built upon by talk of an imminent downgrade for Spanish banks which proved correct when Moody’s cut 16 banks’ ratings (including the biggest) by up to 3 notches following the US close. With Spain now having to pay through the nose to raise short-term debt to pay bills, it looks well down the rocky road that Greece has trodden.

Fitch has also weighed in by cutting Greece’s credit rating and warning that the rest of the region could be put on negative watch given Greece’s re-election opening the possibility of an exit from the Eurozone. It has also suggested that big banks need to raise $556bn or shed $5.5tn in assets in order to meet new tougher capital requirements. Cyprus appears also to be adding to the woes offering assistance to one of its banks, and FT article suggests that JPMorgan’s woes following its $2bn trading loss may not be over with it still holding some $10bn in risky bonds on its books.

Overnight macro data indicates Chinese property prices falling again in April, while the MNI Flash Business sentiment survey also dropped back towards the breakeven level of optimism/pessimism. This morning we have seen German Producer Prices cool more than expected, good for consumers in that inflation likely less, but bad for producers as they may be seeing margins squeezed.

Commodities (Gold, Silver, Oil) found support again yesterday on expectations that the poor macro data will ultimately lead to another round of QE by the Fed which would weaken the dollar.

Macro data thin today, again, with little to generate much impetus into the weekend. Plenty on the contentment to keep things interesting though with Europe woe’s seeming only to intensify and Facebook’s IPO likely creating more fuss this afternoon (priced at revised top end of range) when it opens the Nasdaq with one of the biggest initial public offerings in history.

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

• China               April Property Prices               Another Decline
• China               MNI Flash Bus Sentiment        Declined
• Germany         Producer Price Inflation        Lower than expected
• See Calendar for all details.

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

• Blinkx FY underlying profit up 28 pct
• Mitchells & Butlers half year profit dips
• LSE Group sees profit up for full year 2011
• Heritage Oil says focused on Miran Field, east well drilling
• Fortune Oil says trading in line, confident on China
• Kentz sees full year ahead of view
• Enquest says on track to meet 2012 output target
• PV Crystalox cuts H1 outlook amid ‘challenging’ trading conditions

Morning Press Selection:

• Big banks need extra $566bn, says Fitch – FT.com – Banks http://on.ft.com/MmYLpp
• JPMorgan unit has $100bn of risky bonds – FT.com – Banks http://on.ft.com/LYklOg
• Two tiers, one crisis for Spanish banks – FT.com – Banks http://on.ft.com/KcoLzF
• Size can be deadly in a low-rate world – FT.com – Markets http://on.ft.com/JbbrPa
• Negative US sentiment fuels gold rally – FT.com – Commodities http://on.ft.com/Jb2025
• Rating agency reform: think again – FT.com – Lex http://on.ft.com/J0Guby
• The last chance to rescue the euro – FT.com – Columnists http://on.ft.com/JMJ3RS