Markets opened higher in Europe this morning after China reported accelerating manufacturing activity. China’s official Purchasing Managers’ Index increased to 50.8 in May, while some lenders’ reserve requirements were cut as the government acts to support growth. China’s Communist Party has stepped up the pace of stimulus measures, including faster spending from government budgets and increased railway investment, to help meet an official growth target of about 7.5 percent this year. Asia’s biggest economy is projected by analysts to grow 7.3 percent in 2014, which would be the weakest pace since 1990.

Russia and Ukraine are set to resume talks in Brussels today on a deal that would keep natural gas flowing between the countries amid their conflict over separatists trying to break away from the government in Kiev. After the talks brokered by the European Union began in Berlin last week, Ukraine made its first payment in months to Russia’s OAO Gazprom, transferring $786 million for gas received in February and March.

Forecasts for a rebound in U.S. growth in the second quarter and stimulus from central banks in Japan, Europe and China, along with higher-than-estimated corporate earnings, helped send the value of global shares to a record $64 trillion last week.

Economists forecast the European Central Bank will cut the deposit rate to less than zero when policy makers meet on June 5, with a euro-area factory report today estimated to hold steady at the lowest level since November. Mario Draghi will confront the threat of deflation this week as he prepares to unleash an array of measures to jolt the economy and ignite prices. From negative interest rates to conditional liquidity for banks, the European Central Bank president and his colleagues have signaled all options are up for discussion when they meet on June 5. Before then, data tomorrow may reinforce the view that action is needed, with economists predicting a grim mixture of too-low inflation and unemployment near a record. Draghi has braced investors with warnings on a potential “negative spiral” of prices, and now has new ECB forecasts likely to include a lower outlook for inflation and growth. Those projections will inform talks in the next three days with his management team and then in the wider Governing Council as officials determine how radical a response is needed.

In corporate news, a potential $10 billion U.S. penalty against France’s largest bank BNP Paribas SA for its alleged dealings with Iran and other sanctioned nations, is stirring outrage in the country. It is putting pressure on President Francois Hollande, who hosts Barack Obama this week to mark the 70th anniversary of D-Day, to protect the bank from the American onslaught.

Airline industry earnings that are forecast to reach a record this year on surging U.S. gains mask margins too thin to provide any real resilience to economic setbacks, the International Air Transport Association said. Carriers will earn $18 billion in combined net income in 2014, IATA Chief Executive Officer Tony Tyler said today at the group’s annual meeting in Qatar. That’s $700 million less than previously forecast and represents a margin of just 2.4% on projected sales of $746 billion, or $5.42 per passenger.

Good day and happy trading!

Kristian Camenzuli