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News from the Prudential/AIA scuffle is bleak, as Prudential have finally walked away from the deal. AIG’s board voted against cutting the price of the state-owned financial group and instead favouring the plan to partially sell AIA in an Asian stock market listing. Chief executive Thaim has been called by some to step down due to his total support of the strategy, it seems the investors are dubious that he would get the 75%  support required by the original terms. This has caused sterling to rise over the 1.20 level.

 UK manufacturing continued positively yesterday, with the market staying at the same levels of 58 that were seen in April, export orders have also risen which seems to be positive for this year’s future expectations. Not to be outdone, US manufacturing grew for a tenth straight month in May, while construction spending was the fastest it has been in ten years. This shows that the US should be able to escape the tentacles of the euro zone’s debt crisis. Dollar is lower from equity markets opening positively over the past few days.

 The UK was not the only country to have some good news, finally Germany gets a chance with retail sales rising slightly month-on-month which signals that the consumer sector in the euro zone’s largest economy is picking up. Euro zone unemployment rose to its highest level in almost 12 years in April but a drop in the number of jobless in Germany in May shows that the labour market could be stabilising. The EU are making some moves today, they plan to put forward plans for supervision of credit rating agencies and also discuss corporate governance rules for the financial sector. Merkel has scheduled the election for a head of state on the 30^th June indicating that she is being cautious as it is the last day possible she could choose by law. Risk aversion is strong as investors continue to worry about the economy.

 BP’s failure to stop the oil spill has hit their shares like a ton of bricks, which in turn has affected the value of BP, with lawsuits and criminal investigation taking about $50bn off its market value.

 Things to keep an eye on today are the tidal wave of data from the UK starting at 9:30 and followed by Net Consumer Lending, Consumer Credit and Mortgage approvals. All this if positive will likely help the sterling further but we could see a slump back down off the highs if they come in below expectations. In the US Pending home sales at 14:00 will keep us informed about the housing market trends over the Atlantic, and could damage dollar further if negative.