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

UK 100 called to open +15pts with the risk-taking mood still in place in Asia overnight thanks to a solid performance from US markets, fuelled by better than expected US Durable Goods Orders and forecast smashing US Pending Home Sales offering signs that economic growth may be moving forward and that USconsumer confidence and the US housing market may be rebounding.

While a positive start suggests some confidence in the summit’s outcome, I’m more inclined to think that expectations are actually so low that we can’t really be disappointed if nothing helpful does come out of it.

With Spain and Italy seeing borrowing costs (even short term) move up significantly, in both auctions and in the secondary market, the summit will of course be keenly watched for measure that might settle fears (mutualised debt, direct assistance to banks, bigger firewalls) and ease the burden on troubled the nations’.

Overnight macro data seen Japanese Retail Trade figures beat expectations, however, UK Nationwide House Prices this morning have disappointed.

In FX and commodities, GBP has strengthened vs. USD since the UK’s housing data. EUR remains depressed vs. USD based on the region’s woes and uncertainty. Gold looks to be range-bound ($1560-1590) with moves depending on the direction of the USD and need for safe-haven shelter. The price of Oil (US Crude and Brent Crude) both seeing progress from their lows thanks to some better economic data.

Macro data after the open today likely to focus on the final Q1 figure for UK GDP (any revisions?). Thereafter sentiment and confidence in the Eurozone will be key as crisis rolls on and a summit begins. Italy’s 10yr debt auction will be much watched for whether the borrowing costs are sustainable and the demand is strong/weak.

In the afternoon, markets will want to see whether US GDP is unrevised and if Jobless claims have fallen back (as usual, revisions of prior data almost more important than the reported figure. Outside of data, comments out of the Eurozone summit may serve as the market pendulum.

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

• Japan               Retail Trade                            Better than expected
• UK                    Nationwide House Prices        Worse
• See Live Macro calendar for all details

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

• Debenhams surprises with sales rise
• Nat Express says Spanish performance resilient
• Greene King FY profit up, raises dividend
• Ladbrokes sees H1 digital profits well down on last yr
• Aminex confident on Tanzanian gas find
• Shell again extends offer for explorer Cove Energy
• Severn Trent and Costain in water management JV
• Pursuit Dynamics says exploring options to fund growth
• Bank of Ireland hits loan book divestment target
• Rolls Royce and LG announce fuel-cell investment
• Punch Taverns says set to meet profit expectations
• DS Smith profit +44% on strong Europe sales
• Morgan Sindall says on course to meet targets
• Costain says in-line with the board’s expectations

Morning Press Selection:

• The political test facing the euro – FT.com – Editorial http://on.ft.com/L2xf1y
• Glencore ready to pull Xstrata merger – FT.com – Mining http://on.ft.com/KNqpeQ
• Merkel dubs quick bond solutions ‘eyewash’ – FT.com – Europe http://on.ft.com/MWFo1N
• Beware effects of weakening collateral chains – FT.com – Capital Markets http://on.ft.com/KEcpj3
• Investors eye European stock bargains – FT.com – European Equities http://on.ft.com/LuuXlo
• A manifesto for economic sense – FT.com – Opinion http://on.ft.com/LgSKXL