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

UK 100 called to open +35pts after European leaders made a decision. Yes finally. Unfortunately that decision is to work towards another summit in June – close to when Greece holds its re-election. This does nothing to quell yesterday’s fears that Greece and its Eurozone peers may be working towards life after the Greeks. At this point surely it’s a given. It would be crazy not to. And leaders inverting the issue by insisting “we want to keep Greece in the Eurozone, as long as it accepts its commitments” equates to the same message. After the dead-cat bounce of two days ago, the question is whether this might be the same.

US markets closed with muted gains, having rallied from the red thanks to macro data (US housing) in anticipation that while the summit might deliver nothing concrete, it might set a good platform for a productive June meeting (can Hollande bend Merkel’s arm on Eurobonds?). Furthermore, what’s the ‘next month’ equivalent of mañana? After the US close, Hewlett Packard results beat expectations.

Overnight, Chinese HSBC Flash Manufacturing contracted from April’s figure (7^th consecutive month of sub-50, and 10^th out of 11 months. This doesn’t bode well for the global hopes that China will see a soft landing to its growth story, however, the possibility of it leading to an easing of monetary policy may be what is buoying market sentiment. There has also been disparity between the HSBC and official figures – who should we believe?.

Some bearish reports on the Chinese property sector also keeping risk appetite in check. German GDP out this morning has confirmed the country’s 0.5% QoQ growth (which helped keep the Eurozone out of recession) and 1.7% YoY.

After Germany’s GDP, watch out for the UK’s figure later. Consensus is for a technical recession to be confirmed. The big question is whether it is worse than expected with the recent downward revisions to the construction segment. Whatever the result, it could be the trigger point for the Bank of England to announce more QE, which would likely boost risk appetite.

We also have Manufacturing and Service sector PMIs from France, Germany and the Eurozone – all expected to paint a bleak picture, so it may be down to German IFO data to improve the mood. US durable goods data and jobless likely keenly watched the afternoon.

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

• China               HSBC Flash Manuf                  Continued contraction
• Germany         GDP                                         Prelim growth confirmed
• Swiss                Trade balance                         Worse
• Swiss                Exports                                    Worse
• See calendar for all details

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

• Rio Tinto says China iron ore “steady as she goes”
• C&W Comms full-year in line; will halve dividend
• QinetiQ full year profit up 3 pct
• Britvic half-year profit falls
• Dairy Crest FY pretax loss 10.1 million STG versus 77.8 million STG profit last year
• Shell says extending offer for Cove, considering options
• United Utilities annual profit beats views
• ASOS year profit up 43 pct
• Pursuit Dynamics says P&G blow to hit revenues
• Electrocomponents profit up, overseas markets slow
• Mothercare profit narrows, UK remains tough
• Circle Oil extends loan agreement
• CSR maintains Q2 estimates
• PayPoint yr profit up 8 pct; trading in line
• Booker Group says on track to meet expectations for the year
• Ferrexpo says confident it will deliver on growth plans
• Daily Mail says outlook unchanged

Morning Press Selection:

• Road to recovery divides experts – FT.com – UK Politics & Policy http://on.ft.com/KVSP2s
• Bond exodus on a par with eurozone bank run – FT.com – Markets http://on.ft.com/LE5agC
• US money market funds shun eurozone banks – FT.com – Capital Markets http://on.ft.com/KeKSGm
• China’s exporters look closer to home – FT.com – Retail http://on.ft.com/JHyD8e
• Market Report: Glencore marks unhappy anniversary with new low http://ind.pn/KqvZ4Y