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

  UK 100 called to open +10pts at 6695 ignoring Asian bourses' inability to replicate solid US gains, after China’s HSBC Services PMI dropped back to breakeven – the series’ lowest level since its Nov 2005 inception. China still key within framework global growth, but investors may be demonstrating tougher skin with regards to data volatility.

 US markets had rebounded from their worst week since 2012 benefiting from Portugal’s bail-out of Banco Espirito Santo, results from the likes of Berkshire Hathaway beating expectations, a Fed report showing an easing in lending standards at banks and a broad-based pick-up in loan demand, talks of another Gaza ceasefire and despite renewed tensions on the Ukraine/Russia border.

 Overnight data saw an improvement in the Australian Services Index as well as the nation’s trade deficit (lower imports offsetting soft mining prices), however, with China being its biggest export market the drop in the latter’s Services PMI has offset any excitement. Australia left rates on hold as expected again citing prudence in rate stability.

 After Moody’s recent upgrade of Greece, note its warning that while the France’s deficit is improving it will miss its fiscal targets for 2014-15 (another extension needed?) and so cuts its GDP forecasts.  It also said the Australian banking system outlook remains stable on continued economic growth.

 This morning note Q2 results from French bank Credit Agricole being impacted by its stake in the now bailed-out Banco Espirito Santo, one of many equity financial holdings it has been trying to reduce.

 In focus today; Eurozone PMI Services after weak manufacturing reads last Friday, with the big guns seen confirmed as having improved in July, with France notably back into growth territory. Spain expected to nudge higher, but Italy give a little ground. The UK’s figure is expected to move ever higher. Eurozone Retail Sales are hoped to show a rebound in June

 In the afternoon, the US PMI Services is expected confirmed a touch lower than the June survey’s record high while the ISM non-Manufacturing report gains a smidge and Factory Orders rebound from a weak May. Consensus put US Economic Optimism almost 2 points higher in August (all that M&A?).

 Gold is holding below $1300 after Portugal’s bailout of Banco Espirito Santo as investors welcome a speedy resolution (not ideal, shouldn’t have used state funds) which reduced some of the fears lurking within markets, damping demand for the safehaven.

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