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

UK 100 called to open -55pts with a brief 2-day equity rally (dead cat bounce?), assisted by US housing data and Eurozone consumer confidence, faltering on worries over a ‘Grexit’. Fears heightened after comments by technocrat ex-caretaker PM Papademous saying its risk of departure after mid-June’s elections were ‘real’.

Risk appetite turned on a sixpence in US trading, already tentative ahead of an informal EU summit (understood to mean dinner and a chat about combining growth with austerity, but no decisions) where Germany is standing firm against France’s call for Eurobonds (it would pay more, while periphery pays less) and a better backstop for the financial sector’s woes.

Overnight, Asian markets sold off following the US retreat, reaction to Fitch’s Japan downgrade, the Bank of Japan leaving rates unchanged (not unexpected) but announcing no new monetary easing steps saying that there are clearer signs of a pickup (ball back with US Fed and ECB then), and Dell Q1 results missing expectations.

The aggregate effect of fading hopes of fresh measures to tackle Europe’s debt crisis and Japanese news is weighing on sentiment with Europe’s bourses (stock futures) signalling an open 1% lower.

Overnight, the US equity pull back saw haven seeking in the US Dollar and commodities turn back including Gold, Silver, and the Oils (US Crude and Brent). EUR/USD has fallen back to 21 month lows (3^rd touch) and long term rising support after Greek news and Fitch saying that potential for another LTRO had increased. GBP/USD back below 1.58, at 3-day lows and mid-March levels.  GBP/EUR weakened overnight (Greek exit worries competing with more BoE QE calls).

Today’s focus will be the BoE minutes providing insight into the views of the panel regarding more stimulus, notably ahead of the UK’s final Q1 GDP figure tomorrow (revision?) after the 2^nd decline which sent it into technical recession. UK Retail Sales also of interest. How is the consumer faring, especially after yesterday’s drop in reported inflation (CPI)? Thereafter more US housing data could impact sentiment. Watch US Crude stocks – an 8^th consecutive weekly build?

Results out today from Burberry (BRBY)

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

• Japan               BoJ interest rates                              Unchanged, but no extra easing
• Japan               Merchands Trade Balance                 Worse
• Aussie              Conf Board Leading index                  Improved
• See calendar for all details

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

• Burberry profit jumps; to invest in new, bigger stores
• AMEC says in talks about buying Serco’s nuclear unit
• FirstGroup profit up, to restructure bus unit
• Shaftesbury says rental income rises
• PTT’s $1.9 bln bid for Cove trumps Shell
• Aveva buys steel design software group Bocad
• Paragon H1 pretax profit up 13.4 percent
• Ocado sees Q2 sales up 13 pct
• APR Energy signs 100 MW contract in Latin America
• Great Portland Estates-FY portfolio value up 9.2%

Morning Press Selection:

• Options for banks face daunting hurdles – FT.com – EU Economy http://on.ft.com/Jca125
• A fragile Europe must change fast – FT.com – Columnists http://on.ft.com/L34vTy
• Some euros are more equal than others – FT.com – Columnists http://on.ft.com/KcsNZS
• Hope triumphs, but could soon peter out – FT.com – Markets http://on.ft.com/KRGKLy