Markets hit by growth worries; China plans yuan 'Tobin tax' - as it happened

All the day's economic and financial news, including rumours that Beijing is pondering tighter currency controls

• Latest: US and European markets down
• Bangladesh central bank governor quits after cyber heist
• China considering Yuan Tobin Tax

6.14pm GMT

A continuing fall in the oil price as well as gloomy comments from the Bank of Japan about the economic outlook combined to help sent markets lower. With worries about growth after weak Chinese data over the weekend, mining shares were among the day's biggest fallers. And in the UK a poll giving a lead to the campaign to leave the European Union also helped unsettle investors. The final scores showed:

5.36pm GMT

Earlier, the Serious Fraud Office has ended a long-running investigation into rigging of the 3.5tn-a-day foreign exchange markets without any charges being issued against banks or individuals. Jill Treanor's story is here:

Related: SFO ends foreign exchange fraud inquiry with no charges brought

5.10pm GMT

And in the currency markets:

A bad day for the UK Pound as it falls below US $1.42 and Euro 1.28. Do we blame Brexit or the Budget?!

4.55pm GMT

Back with oil, and an interesting chart on US production:

Fracking now accounts for about half of U.S. crude oil production (via @EIAgov) pic.twitter.com/ZKrC19H9IN

4.48pm GMT

On the fall in equities today, Tony Cross at Trustnet Direct said:

Markets around the globe lost ground on Tuesday as investors again became consumed by global growth fears. The FTSE was dragged lower by miners as Japan got a week of central bank announcements off to the worst possible start. The Bank of Japan opted to keep monetary stimulus unchanged, instead it said it wanted to study risks to growth for the world's third-largest economy, refusing to feed to investors insatiable appetitie for monetary stimulus.

US retail sales then reignited concerns about economy's growth prospects, while investors were spooked by a report that China's central bank is considering a tax on currency transactions to try to curb speculation in the foreign exchange markets.

4.43pm GMT

Crude oil prices are slipping lower for the second day, on fears of a continuing supply glut amid falling demand, as the recent rally runs out of steam

The latest economic data from China, the US and elsewhere, as well as a gloomy outlook from the Bank of Japan earlier today, have combined to reinforce the view that the global economy is slowing down. At the same time there is no sign that oil producers have the ability to cut or even freeze production, especially with Iran keep to boost its output now sanctions have been lifted. Even the prospect of a meeting with Opec and Russia to discuss the oversupply situation has done little to support the price. Analyst Phil Flynn at Price Futures Group told Reuters:

The rally is now retreating on fears that Opec will continue to flood the market with oil in a world where demand may falter.

4.03pm GMT

Nordic bank SEB is expecting a summer hike from the Fed. Economist Mattias Brui(C)r said:

In all likelihood, the Fed will hold rates steady at the March meeting. The current low probability of a hike - four percent according to future market pricing - is relevant since the Fed wants to avoid big policy surprises at the current juncture. While the recent easing in financial conditions should have eased the committee's domestic growth concerns, policymakers probably want to see real GDP growth picking up before hiking rates.

The Fed is most likely to be still looking for policy normalisation. While a number of officials may well vote for only two hikes in 2016, the median of the dot plots [the Fed's indicators of possible rate rises] will likely suggest three hikes in 2016 and four hikes in 2017. Our view is that the Fed likes to see better growth before hiking rates; real GDP growth slowed to just one per cent at an annual rate in the fourth quarter but seems to have picked up to above two per cent in the first quarter. Recession risks have certainly abated in recent weeks as US data has surprised to the high side and financial conditions have improved substantially, thus reversing the tightening seen in January and February. Moreover, the industrial sector is probably at an inflection point too; the most recent ISM manufacturing survey increased substantially and is expected to move back above the 50 level. However, with respect to the policy meeting currently underway, officials may still want to take more time to assess the spill-over effects from financial conditions tightening earlier this year.

3.55pm GMT

Two big events coming up on Wednesday, the UK budget and the outcome of the latest US Federal Reserve meeting.

It is unlikely the Fed will raise rates this time round, with the latest US data in the form of a fall in retail sales. But that does not mean rate hikes will not happen later in the year. David Morrison, senior market strategist at Spreadco, said:

According to the Federal Funds futures market there is no likelihood of another rate hike to follow on from December's move. However, the Federal Open Market Committee (FOMC) is expected to deliver a hawkish statement and talk up the probability of a rate rise at its June meeting. This may or may not lead to a rally in the US dollar. Given how the yen and euro reacted to recent monetary policy adjustments from the Bank of Japan (BOJ) and European Central Bank, nothing can be certain. At the end of January the BOJ took interest rates into negative territory. This was completely unexpected. Yet despite making a move designed to undermine the attraction of the Japanese yen, the BOJ was caught off-guard when the currency rallied sharply following their decision.

Last week the ECB took its deposit rate deeper into negative territory... Despite this, together with a trolley-load of stimulus measures, the euro (like the yen) defied expectations and rallied strongly. Investors inferred that the ECB had reached the limits when it came to easing monetary policy.

So now we have the Fed. Back in December the FOMC projected an additional 100 basis-points of hikes for 2016. The dollar rallied as investors repositioned themselves for the widening divergence in monetary policy between the Fed and the rest of the developed world central banks. But the greenback fell sharply in early February as market turbulence, the ongoing sell-off in oil and concerns over high yield bonds led to a big risk-off move. Investors became convinced that the FOMC would have to dial back on its plan for tighter monetary policy, or even reverse its December hike.

We've had a big rally in risk assets since Janet Yellen delivered her testimony in Washington on 11 February. She managed to convince everyone that the US economy was steaming along at a decent clip, but there were sufficient global concerns for the central bank to be restrained when it came to tightening monetary policy. The FOMC will want to keep the upside momentum going, so expect something similar from its statement and summary of economic projections tomorrow.

3.07pm GMT

The slump in Valeant Pharmaceuticals is continuing, as investors react to the news that failing to file its annual report could trigger a default.

Valeant now down more than 42% https://t.co/aMjCM12787 pic.twitter.com/bAOYLtiawe

3.03pm GMT

Brazil's stock market is being pummelled today by the latest twists in the country's corruption scandal.

Former president Luiz Inacio Lula da Silva, who was dramatically arrested two weeks ago, has reportedly accepted a position as a government minister.

Brazilian markets plunge as if idea that making ex-President a minister to get him immunity from corruption charges isn't a genius brainwave

2.31pm GMT

The clouds of worry swirling over US drugs firm Valeant Pharmaceuticals have darkened today.

Shares in Valeant have plunged by a third in early trading, after the company slashed its revenue forecast by 16% before the market opened.

VALEANT CONFERENCE CALL ENDS . Stock down -36%

2.04pm GMT

Jitters over the oil price and persistent growth worries are hitting stock markets on both sides of the Atlantic.

Shares are falling on Wall Street at the start of trading, sending the Dow Jones industrial average down by 98 points or 0.6%.

Wall Street stocks open lower with Dow down almost 100 points or 0.5%. S&P down 0.6%, Nasdaq down 0.4%

The equity rebound of the past month is a classic "relief rally," where investors are relieved conditions are not as bad as they previously feared. This one has been partly predicated on hopes that China is stabilizing, which helps explain the sharp rise in commodity prices given that China is the biggest commodities consumer.

Unfortunately, signs of real improvement in China are scant. While the U.S. appears to be stabilizing, the Chinese economy remains challenged. The latest evidence came in the form of a 25% plunge in Chinese exports. This was the largest single-month drop since 2009. The government is likely to try to stem the decline with some palliative measures, but a large stimulus package remains unlikely. Furthermore, the drop in Chinese exports calls into question not just the state of the Chinese economy, but the global trade picture as well.

1.59pm GMT

Back to the main story of the morning, reports that China is considering imposing a financial transaction tax on foreign exchange trading.

As explained earlier, the move could potentially deter speculators from targeting the yuan.

"Tobin taxes have had a chequered past, with powerful examples of unintended market disruption and genuine concerns about how a Tobin tax can be effectively operated in a global economy. Sweden's experiment with a Tobin tax in the 1980s ended disastrously, with significant trading activity moving from Sweden to other markets. More recently, the attempts by the EU to introduce an EU-wide Tobin tax have floundered, a key problem being the design of an effective system that discourages migration from the market while avoiding extra-territorial taxation."

Currency trading in China represents a different, more focused target than other Tobin taxes and it may be that such a tax will have the desired effect of dampening yuan speculation. However, history has shown that the knock-on effects of such a tax can be significant and unexpected, and the legal and administrative framework of such taxes are often complex and burdensome. Ultimately, both outcomes are likely to create a more challenging business environment."

China's central bank mulling a Tobin tax. Wide bid-ask spreads suggest higher cost no barrier to yuan drop bets pic.twitter.com/ffdYeXZuVS

1.31pm GMT

As chairman of relegation-threatened football team Newcastle United, Mike Ashley is no stranger to difficult away fixtures.

Related: Sports Direct's Mike Ashley to be formally summoned before MPs

1.12pm GMT

Sky News's Mark Kleinman has a good story - one of Britain's largest private equity firms is plotting a 1bn takeover for the Land Registry.

The Land Registry holds the official details of who owns Britain's property and real estate. Chancellor George Osborne is pushing to privatise it, to help tackle the UK's budget deficit.

The move could attract renewed opposition from trade unions which have warned previously that a sale of the Land Registry could undermine homebuyers' confidence in its data.

Advent, whose investment portfolio includes stakes in companies such as DFS, the furniture retailer, and the FTSE-100 payments group Worldpay, is among a substantial number of private equity groups casting their eye over the Land Registry.

Exclusive: Buyout firm Advent plots 1bn Land Registry takeover as @George_Osborne privatisation spree continues. https://t.co/RihChKCg14

12.58pm GMT

Consumer spending across the US dipped last month, suggesting that the country's economy is a little fragile.

12.35pm GMT

Back in the markets, oil is seeping deeper below the $40 per barrel mark.

This commodity is heavily bearish and the pain over the unrelenting oversupply in the oil markets has periodically diminished investor attraction while fears over a potential decline in demand continue to sabotage any solid recovery in price.

Oil falls again after Iran boosts exports and avoids output freeze https://t.co/dd3ylm7UJj pic.twitter.com/EooK6dF7cj

11.45am GMT

Sainsbury's executives could be tucking into some Taste The Difference champagne, after announcing their first rise in profits in two years.

The results strengthen CEO Mike Coupe's hand, as he ponders whether to launch a higher takeover bid for Home Retail, owner of the Argos chain.

Related: Sainsbury's reveals first quarterly sales growth in more than two years

Related: French Connection shares slump as annual loss hits 4.7m

The market wants to see deals. Big deals, with upfront licence fees and lovely, lovely royalties ever after. But so far, Ocado has not been able to get anyone to sign on the dotted. CEO Tim Steiner thinks they will, but, we feel compelled to point out, to go ahead and start a venture such as Ocado in the first place, one has to be a bit of an optimist.

Ocado is a technological triumph, hamstrung by the difficulties of persuading customers to pay the full cost of delivering the goods. In theory, shorn of the costs of a store estate, highly efficient customer fulfillment centres (CFCs), churning out hundreds and thousands of orders each and every day, largely without human intervention, ought to make good margins. But the cost of getting the goods to the doorstep always seems to outweigh the starting advantage.

11.14am GMT

Europe's long-running jobs crisis has eased a little.

Employment across the eurozone rose by 0.3% in the final quarter of 2015, new Eurostat figures show, and was 0.1% higher across the wider European Union.

Among Member States for which data are available, Malta (+1.7%) and Croatia (+0.8%) recorded the highest increases in the fourth quarter of 2015 compared with the previous quarter, followed by Spain, Luxembourg, Poland, Portugal and Sweden (all +0.7%).

Estonia (-2.4%), the United Kingdom (-1.0%) and Lithuania (-0.3%) recorded decreases.

10.25am GMT

A new opinion poll showing that Britain is more likely to vote to leave the European Union has hit the pound.

Sterling has shed around 1% this morning, from $1.43 to $1.416 against the US dollar, after the Daily Telegraph reported a narrow lead for the Brexit campaign.

10.02am GMT

Women's leggings, coffee pods, microwave rice and computer game downloads have all been added to the 'basket of goods' used to measure UK inflation, while CD Roms and nightclub fees are out.

9.19am GMT

European stock markets are fallen by around 0.6% in early trading, after Japan's central bank struck a gloomier tone after today's monetary policy meeting.

In London, the FTSE 100 has shed 41 points or 0.7% to 6133.

The up-trend that had become established off those mid-February lows is looking set to fail and this is knocking confidence in the natural resources sector in general, although the miners are finding themselves under added pressure this morning as Antofagasta becomes the latest in the sector to axe dividend payments.

8.44am GMT

There's drama in Bangladesh this morning too, where the central bank governor has resigned following one of the biggest cyber thefts ever.

"I resigned and the prime minister accepted it,"

8.25am GMT

Experienced City analyst George Magnus believes China would lose any hopes of challenging the supremacy of the US dollar if it imposed a levy on financial transactions.

RMB as reserve currency RIP. Not that it was likely anyway but now as controls tightened, China plans Tobin tax. https://t.co/ZyIaCuLzGI

8.21am GMT

Christopher Balding, professor of economics at Peking University, believes Beijing could be preparing to weaken the yuan again.

Serious question: explosion outward investment, Tobin tax, tightening capital controls....is this leading up to a surprise depreciation?

8.12am GMT

American macroeconomist James Tobin first pitched the idea of a transaction tax in the 1970s. He suggested a small levy on every financial transaction to 'throw sand in the wheels' of reckless speculation.

It's a popular idea in among critics of the current financial system, who believe it could raise funds to pay for the financial crisis and avoid a repeat.

China's said to draft Tobin tax rules on FX trading, while this may provide near-term stability, it counters internationalization plans.

A Tobin tax could deter legitimate yuan transactions, reduce liquidity & make it harder to hedge (tough to differentiate from speculators).

8.04am GMT

China is reportedly planning a new transaction tax on currency trades, in a new attempt to tighten control of its financial system.

The initial rate of the so-called Tobin tax may be kept at zero to allow authorities time to refine the rules, said the people, who asked not to be identified as the discussions are private. The tax is not designed to disrupt hedging and other foreign-exchange transactions undertaken by companies, they said.

Imposing a levy on foreign-exchange trading would be the most extreme step yet by policy makers to prevent speculative bets against the Chinese currency, after state-run banks repeatedly intervened to support the yuan and the government intensified a crackdown on capital outflows.

7.48am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Central bankers are in the limelight again today. Overnight, the Bank of Japan has left monetary policy unchanged while it watches the impact of its recent move into negative interest rates.

The focus of the session was the Bank of Japan, who ultimately delivered". very little. It certainly seems that the BoJ have little desire to lower the deposit rate deeper into negative territory.