IMF's Lagarde wants help for emerging markets, as oil slides again -as it happened
IMF chief says global economy needs to tame hot money, to help developing economies achieve stable growth
- Latest: Lagarde urges global policy upgrade
- Gloom as UK manufacturing output falls 1.2%
- Pound hits lowest since June 2010
- Oil flirts with $30
- Chart: Beijing aggressively supports the yuan
6.03pm GMT
Thanks to China making strong efforts to support the yuan, European markets have moved higher, albeit off their best levels. The continuing slide in oil prices has tempered some of the earlier enthusiasm, while Chinese trade data early on Wednesday is likely to cause further volatility.
Meanwhile the pound hit a five and a half year low against the dollar following disappointing manufacturing data which seemed to push a UK rate rise further into the distance. The closing scores for European markets showed:
5.21pm GMT
Global oil demand is expected to grow more strongly than previously expected, according to the US Energy Information Administration. But so is US production.
The EIA has raised its forecast for oil demand in 2016 by 20,000 barrels per day, and it expects 2017 world oil demand to reach 96.61m barrels, up 1.42m from the 2016 figure.
4.36pm GMT
Bloomberg Commodity Index falls to lowest since at least 1991 pic.twitter.com/wnU6Yglo4p
4.11pm GMT
Despite the oil price volatility, stock markets are holding up. Jasper Lawler, market analyst at CMC Markets, said:
UK and European shares advanced...as global markets attempt to undo some of the damage wreaked by the tumultuous first week's trading. A higher Chinese yuan was the main source of comfort behind the rise in stocks. The price of oil was less supportive as it jumped back and forth between gains and losses near 12-year lows after a series of investment banks lowered forecasts to as low as $10 per barrel.
3.58pm GMT
After staging a tentative recovery earlier, the oil price has fallen into negative territory again.
Brent crude, which touched $32.38 a barrel at one point has drifted back to $31.01, a 1.7% decline on the day as the dollar continues to strengthen.
OIL today @nictrades pic.twitter.com/u61LOAkdZp
3.34pm GMT
That's enough from Paris.
"It is undoubtedly the case that there will be a wider impact. We will look carefully at unemployment figures and at GDP figures. [Again] while I'm trying to underplay the significance of the North Sea but a lower oil price has other impacts on the wider economy in terms of lower fuel costs."
Related: BP to axe one in five North Sea jobs as oil giant cuts 4,000 staff worldwide
3.28pm GMT
Britain's recovery has not been been built on rising debt within the economy, Mark Carney insists.
He acknowledges that household debt levels are still relatively high, but points out that the private sector has been reducing its borrowing.
3.26pm GMT
There's an "ugly rumour" that global regulators are planning Basel 4 - a new set of regulations to keep banks in check - says Carney. And it's not true.
3.16pm GMT
Mark Carney is now speaking at the "Christian Noyer" symposium in Paris.
But the current Bank of England governor may not say much to move the markets - he's 'in blackout' ahead of Thursday's interest rate decision.
3.07pm GMT
The UK thinktank NIESR has just issued its latest forecast for UK growth.
And it predicts that the economy slightly picked up speed in the last three months of 2015, growing by 0.6%. That would be an increased on the 0.4% recorded between July and September.
*U.K. ECONOMY GREW 2.2% IN 2015 VS 2.9% IN 2014, NIESR SAYS
U.K. Growth Accelerated to 0.6% in Fourth Quarter, Niesr Says - looks rich to me
2.53pm GMT
There's a chilly mood in the City this afternoon.
No, not the weather (although it is a little brisk). It's because Albert Edwards, the notoriously pessimistic analyst at Socii(C)ti(C) Gi(C)ni(C)rale, is starting to deliver his annual assessment of the markets.
Ready for SocGen's 2016 outlook with uber-bear Albert Edwards pic.twitter.com/sGAlnVxxMy
Standing room only in the Marriott ballroom to see uber-bear Albert Edwards today. pic.twitter.com/Y0dv18wWe3
2.44pm GMT
Back in Paris, Sheila Bair - head of the Systemic Risk Council - is warning of potential trouble ahead.
She points out that governments typically pay down debt during recoveries - this time, borrowing is going up and up.
Sheila Bair: "Government debt had exploded. I'm worried we're gonna be out of bullets the next time round."
2.34pm GMT
Wall Street clearly didn't get the memo to sell everything.
Shares are up in early New York trading, following Europe's lead.
Dow jumps 100 in open as oil, yuan stabilize https://t.co/0Adt8j8wwa pic.twitter.com/J9wni7Zy4e
2.30pm GMT
The IMF have uploaded Christine Lagarde's speech here.
Lagarde: The economic health of the emerging world is vital for advanced economies. The 85 percent matter! https://t.co/7bC5vw6elu
According to some estimates, a successful convergence process in the emerging world could triple the size of the global economy in the next 25 or 30 years.
The global community cannot afford the costs of stalled convergence. The 85 percent matter!
2.25pm GMT
Lagarde concludes her speech by wishing Christian Noyer a happy retirement following his time at the Bank of France.
She suggests he takes a tip from Mervyn King - who left the Bank of England vowing to learn to cook and dance.
Lagarde telling Noyer he should now do like Mervyn King when he retired and learn "cuisine and how to dance with his wife" #BDFSymposium
2.22pm GMT
Christine Lagarde is now explaining how the IMF is pushing for a new global approach to financial stability, to help emerging markets.
She says we need two things:
This makes the global safety net stronger for advanced countries than it is for emerging economies. Yet emerging economies critically depend on advanced-country currencies in their trade and finance.
2.11pm GMT
You can watch Christine Lagarde's speech here.
2.10pm GMT
Over in Paris, Christine Lagarde is speaking at the symposium to mark the retirement of former French central bank chief Christian Noyer.
Christine Lagarde on China: "Long-term transformation goal should benefit everyone despite short-term negative spillovers".
#Lagarde: oil, metals prices likely to be low for sustained time
1.42pm GMT
Although shares are picking up today, there's still plenty of nervousness about the future.
Investors face a "cataclysmic year" where stock markets could fall by up to 20% and oil could slump to $16 (11) a barrel, economists at the Royal Bank of Scotland have warned.
In a note to its clients the bank said: "Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small." It said the current situation was reminiscent of 2008, when the collapse of the Lehman Brothers investment bank led to the global financial crisis. This time China could be the crisis point.
Related: Sell everything ahead of stock market crash, say RBS economists
The risk is that this market storm drags on long enough to hit investment, regardless of what the economic data should imply. At the end of the day, market psychology can itself become an economic "fundamental".
Pessimists warn that unless there is a batch of irrefutably good data from China over the next two or three months, the sell-off could become self-fulfilling and quickly metamorphose into the next global crisis.
Top marks to RBS for not sitting on the fence. "Sell Everything" Oil to $16, mkts to fall as much as 20% https://t.co/98tvO0jU4V
1.16pm GMT
Shares are rallying across Europe as investors shrug off their worries about China, and Britain's manufacturing malaise.
There is a feeling that perhaps the selling pressure that has characterised stock markets last week may ease somewhat, as profit-taking among shorts and bargain hunting takes hold. However, with earnings season now underway, the selloff seen in 2016 so far could provide great buying opportunities for those expecting to see positive updates.
12.40pm GMT
Martin Beck, senior economic advisor to the EY ITEM Club, points out that the fall in the pound should help UK manufacturers.
But November's weak performance may show the sector dragged the economy back at the end of 2015.
"Industrial production fell by 0.7% between October and November, with all four of the sub-sectors seeing output decline. This was the largest monthly fall in output since January 2013.
"The biggest cause for concern is the manufacturing sector, where output declined by 0.4% for a second successive month in November. This may have followed a very strong September, but the business surveys continue to point to - at best - stagnation. Although the recent fall in the pound should provide some support to exporters, it is difficult to find many other reasons for optimism around the manufacturing sector.
12.31pm GMT
Looks like China will be in focus tomorrow too, when we discover how well (or badly) it traded with the rest of the world...
China Trade Data out tonight; both Export and Import contraction seen worsening in Dec
12.09pm GMT
Britain's unions know who to blame for Britain's manufacturing decline - finance minister George Osborne.
"George Osborne's cocktail of threats has been spiked with his own failures. Not least of these is manufacturing, which is still far behind its pre-crisis peak and has fallen by 1.2 per cent over the last year.
"If the government had made the right choices with strong investment in skills, infrastructure and innovation, we could be in a much stronger position."
"Steel production has seen its sharpest fall since the financial crisis. This is the inevitable result of the government's failure to step in and give UK steel the support it needs. Unless the government puts in place a genuine industrial strategy, we risk further serious consequences for steel and many other manufacturers down the supply chain."
11.55am GMT
Thousands of oil workers at BP face the axe, as the company adjusts to the new era of cheaper oil.
Oil major BP plans to cut at least 4,000 jobs globally in its oil production division this year to reduce costs amid a steep decline in oil prices.
"We want to simplify structure and reduce costs without compromising safety. Globally, we expect the headcount in upstream to be below 20,000 by the end of the year," a company spokesman said.
11.38am GMT
Back to oil.,.. and Nigeria's suggestion today that OPEC could hold an emergency meeting soon has been slapped down by the United Arab Emirates.
UAE energy minister Suhail bin Mohammed al-Mazroui argued that the cartel's current strategy (not cutting production) should be given more time.
"I'm not convinced OPEC alone can change or can solely unilaterally change this strategy just because we have seen a low in the market."
UAE moves to quash talk of Opec emergency meeting as #oil slumps amid Opec production record https://t.co/v5nB9CQUAX pic.twitter.com/E2XAMZg2OW
11.24am GMT
After November's weak performance, Britain's industrial production sector is still around 9% smaller than before the crisis.
The UK is the second largest exporter of services in the world and the US economy is currently 88% services. In a competitive world it is better to export high value goods rather than low value goods unless you can make those low value goods at such low prices that (price x volume) = big.
Whilst there are countries with populations willing to accept lower wages than us for their day's work we have to sell goods they can't. And that is now mostly services.....
Once upon a time the UK's agricultural industry accounted for 90% of the country's economy. It is now about 3%. Should we readjust back to that too for nostalgias sake?
As long as we are exporting services that pay for the lower valued manufacturing stuff we buy in then that's fine. Yet services are lost in the data. The historic way of measuring trade data demotes many services into the invisibles part of the equation leaving attention resting on the more obvious manufacturing figures. <end>
11.09am GMT
JP Morgan reckons that first UK rate rise is now 10 months away.
Economist Malcolm Barr explains:
Recent disappointments in the pay data and the drop in oil prices had already put our call for the Monetary Policy Committee (MPC) to raise rates in May at risk. The weakness in this IP report is the straw that breaks the camel's back. We hence push our forecast for the first hike back by 6 months to November 2016. The forecast shows rates rising by 25bp a quarter thereafter. In our minds, the MPC are very much in "data dependent" mode, rather than feeling at all constrained to adhere to any path suggested by their commentary.
Our best guess is that the MPC vote will remain at 8-1 at this week's meeting, although these data raise the risk that McCafferty will choose to withdraw his vote for higher rates for now. "
JP Morgan pushes back forecast for first BoE rate hike to November 2016 from May 2016 after today's weak industrial production data.
10.09am GMT
Sterling has fallen to its lowest level against the US dollar since early June 2010, following the disappointing UK industrial production data.
The pound has shed half a cent, touching $1.4484, as traders calculate that there's no prospect of interest rates rising soon.
"Both industrial and manufacturing production have posted lower-than-expected readings for November.
Combined with soft growth figures and Brexit fears, these results will likely dampen any expectations of a UK interest rate rise in the near future".
9.59am GMT
The FT points out that UK manufacturing has been weakening for several months:
UK manufacturing got whacked in November, contracting for the 5th straight month https://t.co/z2Vu2cw4hB pic.twitter.com/1zN6z21HlI
9.47am GMT
Just in: Britain's industrial sector suffered its biggest fall in output in almost three years, as manufacturing shrank again.
Industrial production shank by 0.7% month-on-month, according to the Office for National Statistics. That's the biggest drop since January 2013, and much worse than expected.
There were decreases in all of the main sectors, with manufacturing, mining & quarrying and electricity & gas having the largest contributions to the decrease.
UK industrial output -0.7% in November, worse than all 30 forecasts in a Reuters poll of economists and the biggest fall in almost 3 years.
#UK industrial output plunges most in almost 3 years https://t.co/5yhzXLiMYA via @jillianfward pic.twitter.com/hV5IHG855b
9.36am GMT
Many US oil producers will suffer severe financial pain, and possibly go bust, unless the oil price recovers from its current lows, analysts fear.
Marketwatch has the details:
As many as a third of American oil-and-gas producers could tip toward bankruptcy and restructuring by mid-2017, according to Wolfe Research. Survival, for some, would be possible if oil rebounded to at least $50, according to analysts. The benchmark price of U.S. crude settled at $31.41 a barrel, setting a 12-year low.
More than 30 small companies that collectively owe in excess of $13 billion have already filed for bankruptcy protection so far during this downturn, according to law firm Haynes & Boone.
9.16am GMT
Retail magnate turned football chairman Mike Ashley could suffer a double relegation this year.
9.00am GMT
This chart shows how Beijing drove up the interest rate on offshore yuan deposits overnight, in a bid to strengthen the currency.
CHART: The overnight bank rate for China's offshore currency just exploded (via @BIAUS) https://t.co/V8ZkzeRFnB pic.twitter.com/oy50xbINaz
8.50am GMT
The latest slump in the oil price isn't causing alarm in the European stock markets.
Instead, shares are rallying as traders applaud China's aggressive moves to prop up the yuan overnight.
8.37am GMT
Debenhams has also beaten festive expectations, posting a 1.9% jump in like-for-like sales over Christmas.
That's rather better than its main rival, Marks & Spencer, which posted a 5.8% decline in general merchandise sales. M&S blamed unusually warm weather, but clearly some retailers coped better than others ...
Starting to look a lot like the weather wasn't a Christmas problem, it was an M&S Christmas problem... Debenhams & Morrisons sales up.
8.22am GMT
2015 was a rough year for UK supermarket chain Morrisons, as it struggled to cope with falling sales and profits.
Morrisons achieved a surprise increase in sales over Christmas as customers returned to the supermarket chain.
Sales at stores open a year or more, excluding fuel, rose 0.2% in the nine weeks to 3 January, Morrisons said in a trading statement. City analysts had expected like-for-like sales, which exclude new stores, to fall 2%.
Morrisons shares surge 12% to 171p after better than expected Christmas: Tesco dragged higher too - up 6% to 154p and Sainsbury +3% to 251p
8.08am GMT
There is relief in Shanghai as the China's stock market closes up today.
#China stocks end higher in state efforts to stabilize the Yuan. pic.twitter.com/NhJGYXa06E
7.57am GMT
OPEC members who don't like the look of $30 per barrel oil should take a deep breath -- analysts at Standard Chartered think prices could hit $10(!) a barrel.
The bank argue that the strength of the US dollar, and pessimism in the stock market, could send oil down to levels not seen since 1999.
"Given that no fundamental relationship is currently driving the oil market towards any equilibrium, prices are being moved almost entirely by financial flows caused by fluctuations in other asset prices, including the US dollar and equity markets.
"We think prices could fall as low as $10/bbl before most of the money managers in the market conceded that matters had gone too far."
7.52am GMT
The slump in the oil price could prompt the OPEC cartel into an emergency meeting, according to Nigeria's energy minister.
Emmanuel Ibe Kachikwu, Nigeria's minister of state for petroleum resources, told reporters at a conference in Abu Dhabi that a couple of OPEC members have already suggested a meeting.
#OPEC may hold emergency meeting in Q1 if #crudeoil prices remain low, says Nigerian oil minister Emmanuel Ibe Kachikwu
#Crude | RTRS - NIGERIA OIL MIN SAYS OPEC MEMBERS MAY LOOK INTO HOLDING EMERGENCY MEETING IF PRICES DROPPED <$30 pic.twitter.com/2wLo5s2xGG
7.42am GMT
Oil is coming under renewed pressure today, as traders speculate about just how low the crude price will fall.
Crude prices tumbled by another 3% today, hitting fresh 12 year lows. It is being driven down by concerns over the world economy's weakness which is fuelling the oversupply glut.
7.25am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It looks like another day dominated by two familiar themes - China, and oil.
"The market suspects that the People's Bank of China is possibly using major state banks to directly drain yuan liquidity in offshore markets," said a dealer at an European bank in Shanghai.
The dealer described the strength of the central bank's actions as being of "nuclear-weapon" level strength. "Its actions are comparable to steps taken by other central banks when they previously fought against international speculators, such as George Soros," he said.
Related: China resorts to 'nuclear strength' weapons to defend the yuan
Our European opening calls: $FTSE 5874 up 2 $DAX 9818 down 7 $CAC 4313 up 1 $IBEX 8848 down 38 $MIB 19752 down 4
UK companies posting numbers - GREGGS, WM MORRISON, AO WORLD, DEBENHAMS, SAGA, BIG YELLOW - US - CSX
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