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

UK 100 called to open -55pts at 6820, back at week-long rising support since last-week’s fresh 2yr low. Bulls need a break above 6835 to confirm a bounce and revive the uptrend. Bears require a breach of 6810 to extend yesterday’s sell-off. Watch levels: Bullish 6835, Bearish 6810

Calls for a negative open come after wobbly trading on Wall St (Dow slightly higher, Nasdaq/S&P lower) with sentiment turning negative into the Asian session following disappointing China Retail Sales and Industrial Production which has dragged on Australia (China = biggest export market), with dual-listed Miners down as much as 1.5%.

GBP weaker after UK PM May failed to convince European leaders to improve the Brexit deal, the EU27 standing firm on the Irish backstop remaining in play “unless and until” a post-Brexit EU-UK deal was stuck. This is not helping the UK Index , however, with corresponding USD strength (even after Trump said he hoped the Fed wouldn’t raise interest rates further) hampering commodities which are already hurting from weak China data.

In corporate news this morning, British American Tobacco reorganises management board from 1 Jan; new positions for innovation and digital transformation eliminate COO & Business Development director roles while regions report directly to CEO.

Watch Telecoms names like BT, Vodafone, TalkTalk and Telecom Plus with Ofcom launching a review of UK broadband prices, proposing companies should be made to tell customers about the best available deals. Reuters reports that Chinese battery firm GEM stopped cobalt purchases from Glencore under and existing 3-year contract after the metal’s price nearly halved since March.

Aggreko awarded a c. $200m contract for temporary electricity generation for 2020 Tokyo Olympics. Company confident in achieving mid-teens Return on Capital 2020 target. Restaurant Group receives 92% acceptance for rights issue. TP ICAP appoints veteran trading executive Richard Berliand as Chairman.

Balfour Beatty sees FY above expectations after additional Infrastructure Investments sale. Now forecasts FY Infrastructure Investments profit from disposals ~£65m; paid down remaining convertible bonds; gross debt -45%; avg. monthly net cash forecast £185m vs £140-170m guidance. Year-end order book +5.2% at £12bn.

SThree FY gross profit +12% YoY (Contract +14%, Permanent +6%). All geographies growing strongly except UK (-5%). FY adj. pre-tax profit expected slightly ahead of consensus. Reach Group confident that 2018 will be will be marginally ahead of market expectations.

In focus today will be day two of the European Council meeting. Leaders are done with Brexit deliberations, UK PM May predictably leaving Brussels empty-handed, the focus shifts to other Eurozone concerns including migration, single market, citizens consultations and the euro area.

Today is a busy day for macro data. Of particular interest are December’s preliminary European Manufacturing and Services PMIs (8:15-9am), with France expected weaker while Germany and the Eurozone expand.

US Retail Sales (1:30pm) growth is forecast slower in November while US Manufacturing/Industrial Production (2:15pm) keeps growing. US Manufacturing PMI (2:45pm) is anticipated weaker with Services unchanged.

In terms of speakers, the ECB Vice President de Guindos (8:15am) gives a keynote address entitled “European Financial Markets – Too Much Variety?” at the 6th Frankfurt Conference on Financial Market Policy. Colleague Lautenschläger (9:30am) is part of a panel discussion at the same event “After all the reforms: Where did we end up?”.

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