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

UK 100 called to open +30pts, with Asian equities maintaining the positive lead provided by the US, helped by positive US macro data (Retail Sales, Business Inventories) and a well-received earnings report from banking behemoth Citigroup. This offset earlier scepticism in Europe that better than expected Chinese trade data from the weekend was enough to negate china/Asia/global slowdown fears.

Positive US data adds to Friday’s jump in Uni of Michigan Consumer Confidence, with the aggregate being an assumption that US economic growth could in fact be gaining momentum – opinion bolstered by a Fed official who, while reiterating concerns over QE3, sees the growth landscape firming up next year with fundamentals improving.

Back in the Eurozone, the Greek PM declared that Greece will soon (everything is relative!) receive the next tranche of bailout aid, helping sentiment, although this is in contrast to the Greek Finance Minister yesterday saying that nothing will be agreed with the troika before this week’s Eurozone summit (will this one achieve much?). As if we needed it, Portugal provided a reminder of the hurdles the region faces, submitting its most austere and bailout assistance-requiring budget (tax hikes, public sector job cuts), unsurprisingly leading to demonstrations.

Overnight in Asia, markets unperturbed by news that S&P has cut the ratings of 11 Spanish banks, with this a usual follow on from a sovereign downgrade. The Australian dollar was weaker versus majors on signals from the Royal Bank of Australia (RBA) that more interest rate cuts could be round the corner. The neighbouring New Zealand dollar was also weak on softer inflation data.

Sentiment also buoyed by an FT article that Spain was ready to make a formal request for aid, allowing the European Central Bank (ECB) to help keep sovereign borrowing costs down, but it's stalling not because of the PM’s likely political demise, but because of the potential knock-on contagion to the likes of Italy (higher borrowing costs).  It also suggests that rather than asking for a bailout, Spain may just ask for a credit line, resulting in the bailout fund European Stability Mechanism (ESM) not having to disburse anything and the ECB probably not even having to buy a single bond.

This morning we see mining major Rio Tinto maintain guidance for 2012 iron ore production (80% of earnings, the bulk to China) seeing operations running strongly despite volatile markets caused by China’s uncertain economic outlook.

In FX, GBP/USD has rallied back to 1-week highs near 1.61, but remains in its 1-month downtrend on concerns that QE3 devalues the value of the dollar. EUR/USD has regained 1-week highs just shy of 1.30 on optimism that Spain might pull the trigger. USD/CHF almost back at 1-month rising lows just below 0.93. GBP/EUR weaker, back near yesterday’s midday lows  of 1.238 on EUR positivity. USD/JPY maintains 4-day rally and has tested 5-Oct highs of 78.9.

In commodities, while QE3 still an-inflation worry, Gold has pulled back to 1-month lows on concerns that solid US macro data may reduce the duration of the Fed’s open-ended programme. In the Oil arena, US Crude has recovered from yesterday’s lows to near its average $92/barrel level of the last week. Brent Crude has also spiked back from the lows of yesterday, and could test last week’s highs of $116/barrel helped by supply concerns derived from Middle-Eastern tensions.

Today’s focus is all about inflation with the UK, Eurozone and US all updating on Consumer price rises. The UK’s price growth is seen cooling, while the Eurozone and US’s are forecast to accelerate slightly. The UK also provides news on Producer Prices, which are expected to rise for both input and output prices. The ZEW Survey from Germany is expected to deteriorate on the current metric, but the economic sentiment should improve.

US industrial Production later in the afternoon is seen rising, rebounding from last month. US housing seen flat. Results out from Goldman Sachs will be used as another measure of banks’ performance after mixed response so far to those from JPMorgan, Wells Fargo and Citigroup. After the US close, technology giants Intel and IBM report which could provide a signal on global growth.

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

• Japan               Tokyo Condominium Sales                  Deteriorated
• See Live Macro calendar for all details

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

• Bellway FY profit soars on exposure to South of England
• GKN says Q3 helped by automotive demand in U.S., China
• Petropavlovsk says Q3 gold production up 39 pct q/q
• Carpetright Q2 UK sales edge up, Europe falls
• Spirit Pub year profit up 16 pct
• N Brown H1 profit down 4.5 pct
• JKX sees output reaching 10,000 barrels in Q4
• Informa says expectations for year unchanged
• Rio Tinto maintains iron ore guidance despite China risks
• Bodycote acquires U.S. heat treating firm
• Smiths News FY underlying pretax profit 47.5 mln stg, up 23 pct
• Sportingbet agrees terms of 530 million stg takeover
• Chime Communications acquires pharma data firm