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

UK 100 called to open +25pts as equities in Asia rebounded (following US markets) after four days of retreat, with hopes (tepid at best) of meaningful collective action from tomorrow’s European summit to tackle the sovereign debt and banking crisis (integration on the fiscal, political fronts; rescue funds to go straight to banks rather than via sovereigns, mutualised debt) and better than expected US macro data in the form of Housing prices contracting at slowest rate in two years.

Nonetheless, gains tempered by several negatives; ratings agency Eagan Jones downgrading Germany (AA- to A+) citing risk it ends up with unrecoverable debts from Eurozone periphery. Bank of England (BoE) governor Mervyn King saying crisis not even at half-way stage, with committee members presenting much worse outlook than six weeks prior. Macro data still very mixed with US Consumer Confidence at odds with the housing data and Spain having to pay through the nose for short term debt.

After UK finances showed a marked decline, GBP remained under pressure versus USD and EUR. This was exacerbated by Mervyn King’s comments which suggest that a bad outlook backs up his call for more quantitative easing (QE: money printing) to kick-start the economy, likely next month, and potentially alongside the US Federal Reserve (Fed), European Central Bank (ECB). Coordinated action could be a nice way of making up for another (likely) wasted summit opportunity by European leaders.

In FX and commodities, the weak GBP and EUR (UK finances and sovereign debt woes) has meant moves into the safe-haven US Dollar which has in turn kept pressure on commodities such as Gold, Silver, US Crude Oil  and Brent Crude Oil which are priced in the currency.

Macro data today likely to focus on UK home loans and CBI Reported Sales in the UK – both are indicators of consumer optimism. In Europe German consumer inflation CPI of interest given the country’s pivotal position in the region, as will Italy’s short term debt auction for signs of stresses in raising money. Stateside, US Durable Goods orders a good gauge of economic activity (more orders means more consumption), while US Pending Home sales give an idea of consumer sentiment (moving house means you are confident you can pay for it).

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

• Germany         Import Prices                                      Better than expected
• See Live Macro calendar for all details

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

• Xtract Energy shares suspended on financing uncertainty
• Bwin.party says Shuffle Master withdraws from talks
• Glencore to consider changing Xstrata pay package
• Tate & Lyle says US court finds in its favour
• San Leon Energy disposes of field royalty
• Yule Catto says nitrile weakness, currency to impact performance
• Balfour Beatty wins £175m Hong Kong contract
• Mediterranean Oil & Gas says positive news for Italian project
• Bunzl says operating margin improves
• British Land buys Harmsworth Quays from Daily Mail
• SSE says confident on future dividend increases
• CPP operating in line with market expectations
• Northgate profit rises
• C&C expects FY operating profit of €112-118m

Morning Press Selection:

• Qatar turns on Glencore-Xstrata terms – FT.com – Commodities http://on.ft.com/LdYilV
• City fear over Cameron’s EU demands – FT.com – UK Politics & Policy http://on.ft.com/LqbnXB
• Monti’s need for speed underpins EU summit – FT.com – Europe http://on.ft.com/Mz2ywx
• Britain’s unresolved eurozone dilemma – FT.com – Editorial http://on.ft.com/NLeTke
• Be alive to the risks and rewards of a banking union – FT.com – Opinion http://on.ft.com/OofWb5
• Look beyond summits for euro salvation – FT.com – Columnists http://on.ft.com/MnAb85
• Investors search for good news in bad news – FT.com – Markets http://on.ft.com/NLfpii
• Why German bonds are no ‘big short’ – FT.com – Markets http://on.ft.com/LMIrdw
• Commodity currencies defy prices gloom – FT.com – Currencies http://on.ft.com/KLwFE1