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

UK 100 called to open flat (again), with risk appetite in Asian markets firm as focus turns to the US Federal Reserve’s (Fed) rate decision after the European close today. It is widely expected that asset purchases (QE) will be ramped up to offset the expiration of Operation Twist at year-end and to maintain stimulus for the US economy. US equities closed higher on the prospect.

Fiscal Cliff optimism rose with talks between the House Speaker Boehner and President Obama taking place, but real breakthrough progress is still eluding us with disagreement remaining towards each side’s proposals and many saying a deal difficult before Christmas.

Asian markets unperturbed by news that North Korea had successfully launched a rocket over Japan, despite recent reports of delays to its plans, although Chinese equities are weak. Overnight, Japanese Machine Orders rebounded, but the government cuts its assessment saying trends weakening. In China, the China Post says the country ramped up production of industrial materials including copper and oil products in November suggesting smelters and refiners gaining confidence that the world’s #2 economy is on a recovery course.

Back in Europe, there is uncertainty as to whether Greece’s crucial debt buyback had been successful enough to allow the troika of bailout lenders to release the country’s next tranche of aid. Government officials said it had attracted enough demand, but the Daily Telegraph reports that Eurozone finance ministers held a conference call last night to discuss the next steps after the buyback programme failed to achieve the debt-GDP reduction target set by the IMF (demand high enough, but average price paid higher).

The UK 100 keeps probing higher leading us to reiterate the possibility that the index continues to grind higher into year-end rather than rally or correct. Nonetheless, note the steepening ascent (rising wedge) over the last few days which could be the setup for a correction. As we said yesterday, new measures (QE4) from Bernanke this afternoon could well trump negative sentiment surrounding Eurozone politics and debt crisis progress as well as the Capitol Hill stalemate. However, it he doesn’t move (seeing unemployment situation better? unlikely) markets could well be disappointed.

Today’s focus will be on UK jobless data where unemployment rates are seen unchanged and jobless claims seeing a slower rise than last month. After significant progress in the 3-month employment change last month, this is expected to be more muted. The data is all the more important after the chancellor had to extend austerity and recovery targets. Eurozone Industrial Production expected to show no growth in October, and remain weak over the last year on account of the austerity, reforms and slowing global growth biting. Later in the day it will be all about what Bernanke says in the evening.

In FX, GBP/USD back at 3-day highs of 1.612 as the USD weakens back on the prospect of more QE being announced this evening. Support possible at recent lows of 1.60. Rising lows from mid-November could mean support at 1.605. EUR/USD slowed and maybe even topped out overnight at 1.301, having rallied from below 1.29 at the beginning of the week. Rising lows still in place from mid-November, but falling highs also still present from early December. GBP/EUR still trading around 1.238 support after the weakening of yesterday from highs of 1.244.

In commodities, Gold now trading in tight range. Prospect of weaker USD helped bounce from recent lows of $1685, but last three days seen trouble getting much higher than $1715.  Support at $1705. But note falling highs over last 3 days. In Oil, US Light Crude stuck around $86. After falls from $90, support to kick in again at $85? Brent Crude slightly more buoyant with gains back to week-highs of $108.5.

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

• Germany         CPI                   In-line
• See Live Macro calendar for all details

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

• Stagecoach refutes U.S. Twin America allegations
• Darty swings to half-year loss
• Imagination Tech first-half adj pretax up 10 pct
• Ultra Electronics wins $53 mln U.S. Navy contract
• Xaar sees 2012 profit beating market view
• Senior Plc continues to expect 2012 profit in line with its expectations
• Standard Life sells a further two Canadian properties
• Travis Perkins says on target to meet FY EPS forecast
• Carillion says 2012 trading in line
• SuperGroup on recovery path with profit rise
• Carillion Canada wins 525 mln stg road contracts
• Ophir says Jodari field has potential to anchor Tanzania LNG
• Carillion wins 150 mln stg local council contract
• Sylvania Platinum says production recovers after strikes
• Polo Resources in offer to acquire more of Signet
• Afren begins first 3D seismic survey of Seychelles
• Lupus Capital says trading in line
• Salamander ups stake in Kalimantan field