World stock markets hit record highs as Chinese GDP beats forecasts - as it happened

All the day's economic and financial news, including reaction to China's latest growth figures

• US manufacturing figures disappoint
• China beats forecast with 6.9% growth
  
• Retail sales, industrial production and investment also rose
• Experts: It's a good sign for global growth
• MSCI World Markets index hits new peak
• Carolyn McCall named as ITV CEO

5.58pm BST

Stronger than expected economic growth from China set a positive note initially for investors. But there was still some caution ahead of a busy week for US company results, while weak US manufacturing figures added to the expectation that the Federal Reserve would hold back on further rate rises.

So in all it was a mixed performance. Most European markets dipped back, but the Chinese data helped lift commodity prices and in turn mining shares, which pushed the FTSE 100 higher. David Madden, market analyst at CMC Markets UK, said:

European equity markets are mixed today, but London's large exposure to commodity related companies has given it the edge over its eurozone counterparts. The better-than-expected growth numbers from China boosted the share price of Rio Tinto, Glencore, Anglo American and BHP Billiton. The second-largest economy in the world is easily on target to achieve its 2017 growth target of 6.5%, as it grew by 6.9% in the first quarter and second quarter.

4.20pm BST

It's probably no surprise that US markets are drifting a little, since it's the start of a busy week for company results.

During the upcoming week, 68 S&P 500 companies (including nine Dow 30 components) are scheduled to report results for Q2 via @FactSet

Only 6% of the S&P 500 have reported so far, 80% have reported actual EPS above the mean EPS estimate. 100% Materials & Financials have beat

3.48pm BST

The government's ambitious reform program could go a long way in addressing France's longstanding economic challenges-persistent fiscal imbalances, high unemployment, and weak external competitiveness.

The emphasis on reducing public spending, to allow gradual fiscal consolidation and tax relief, is appropriate. To make the strategy credible, deep reforms are needed at all levels of government, with major spending efforts from the start.

3.34pm BST

Gold is moving higher, with the dollar weakening as the idea of another rate rise from the US Federal Reserve continues to fade.

It has added $6 an ounce to $1234, while silver is also higher, up from $15.99 to $16.17. Meanwhile with the New York manufacturing data the latest to hit the dollar, the Dow Jones Industrial Average is now in negative territory. Connor Campbell, financial analyst at Spreadex, said:

Following a far worse than forecast Empire State manufacturing index reading, falling from 19.8 to 9.8 month-on-month, there wasn't much reason for the Dow Jones to build on its recent highs this Monday...In general the week is a bit light on Grade A data from the US, meaning the Dow's movements may end up being dictated by its reporting companies rather than any rate hike chatter.

In the Eurozone the DAX and CAC spent the day flitting from red to green and back again...The FTSE remained far and away Monday's best performer, even if it fell from its midday peak. The UK index is up 50 points, and is just about keeping its head above 7400, thanks to the dual boosts of some China-inspired gains in the commodity sector and a Brexit-dragged showing from sterling, which is down between 0.1-0.2% against the dollar and the euro.

2.59pm BST

After facing the public in Birmingham last year to try and explain its role and its actions to boost the economy, the Bank of England is venturing out again, this time to Liverpool.

On 16 November, governor Mark Carney and his team will be holding the latest Future Forum, including discussing how the Bank has been trying to make its work more accessible. The Bank said:

We'll be talking about economics and the economy and explaining to people how the financial world affects their lives. We'll also be discussing what the Bank can do to raise public understanding of its role in the economy...This year, more than ever, the emphasis is on communications - that is, the exchange of ideas. We want to have a real two-way conversation with the wider public, hearing from those whose lives are influenced by the Bank's policies, listening, just as much as speaking.

Related: Mark Carney: Bank of England will not take policy instructions from politicians

2.48pm BST

The MSCI world index may have hit a new high but elsewhere the picture is not quite as clear cut.

On Wall Street the Dow Jones Industrial Average - which touched a new peak during Friday's session - is virtually flat, up just 2 points ahead of a a big weak for US earnings. The S&P 500 and Nasdaq Composite were also marginally higher.

2.05pm BST

Over in the US, and there have been some poor manufacturing figures from New York.

The Empire State manufacturing index dropped from 19.8 to 9.8 in July, missing expectations of a smaller decline to 15.

#UnitedStates NY Empire State Manufacturing Index at 9.8 https://t.co/OuXXb5tAs8 pic.twitter.com/yZUe722l6H

An unexpectedly cautious testimony from Fed chief Janet Yellen to US lawmakers, as well as some disappointing economic data on the part of the US consumer and some more weak inflation data appears to raising doubts about the pace of future US rate rises.

1.55pm BST

Back with the Chinese growth figures and the financial oversight news. Sean Yokota, head of Asia strategy at Nordic bank SEB, said:

China's second quarter 2017 GDP remained elevated at 6.9% year-on-year and beat the market's expectations of 6.8%. June monthly indicators, such as industrial production and retails sales, are also showing strength. Monetary tightening has helped slow the domestic economy but the upside in Q2 2017 GDP came from stronger external demand. Due to stronger than expected growth in the first half of this year, we have revised up our 2017 GDP forecast to 6.8% from 6.7%. We still expect a mild slowdown in H2 2017.

Over the weekend President Xi of China announced the creation of a super regulator called the Financial Stability and Development Committee (FSDC). This move clearly shows that the government and President Xi see the increasing risk from financial market instability as a priority. The contagion risk bleeding from financial market risk to political risk has grown to a point where President Xi needs to monitor this at the State Council level. Another implication is that financial market development will slow as when authorities are focused on risk, the market becomes more conservative and liberalisation slows.

1.43pm BST

The other news out of China today is that Winnie the Pooh has seemingly fallen foul of the country's internet censors.

The much-loved, tubby bear can no longer be discussed on Chinese social media sites, apparently as part of a new crackdown by Beijing.

Posts including the Chinese name of the fictional bear were censored on Sina Weibo, ChinaTwitter-like platform, over the weekend, while a collection of animated gifs featuring the bear were removed from social messaging app WeChat.

While no official explanation was given, observers suggested the crackdown was related to previous comparisons of President Xi Jinping with the portly bear created by the English author AA Milne that went viral.

Winnie the Pooh makes the front page of the @FT (and Xi) pic.twitter.com/OZ1JUUveyz

1.40pm BST

Apart from China's growth figures, economists are also digesting the conclusions of a conference on regulation held by Chinese officials last weekend.

There's much interest in president Xi's decision to create a cabinet-level committee to coordinate financial oversight. That could be a sign that Beijing is more concerned about problems brewing in the country's financial system.

Big China econ news not the upbeat data but the message from Financial Work Conf: efforts to limit credit risks to continue for years

of course easy to say that when growth strong. True test is whether tackling credit risk remains priority when growth slows. Still uncertain

1.00pm BST

Several economists are predicting that China's growth rate will ease, sooner or later.

Zhou Hao, an economist with Commerzbank, says (via the WSJ):

"Though the Chinese economy was holding up better than expected in the first half of the year, a slowdown is kind of inevitable."

#China Q2 GDP 6.9%, slightly ahead of our 6.7% forecast. Not expecting serious slowdown until policy tightening after Plenum late this year

12.25pm BST

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12.24pm BST

11.50am BST

If China's GDP does hold up, then it could post its first year of faster growth since 2010.

#China 2Q GDP growth tops forecasts on strong investment, consumption. Consumption fuelled 63.4% of GDP growth in 1H https://t.co/7epNTZVyY6 pic.twitter.com/9rEbKN7Xqw

11.46am BST

Dan Wang, China analyst at the Economist Intelligence Unit, believes today's growth figures bode well for the next six months....

China's economy will hold up for the second half of the year, given sustained state-led investment and robust household spending. The monetary policy will remain neutral--cracking down shadow banking while increasing lending through formal banking channel.

Given the high base in 2017, however, to sustain high growth for 2018 will be tough.

11.06am BST

The pound has fallen back from last week's 10-month high this morning, as City traders fret about Brexit.

David Davis, Britain's secretary of state for exiting the European Union, is back in Brussels for fresh talks with EU officials (although only one side had their paperwork on display.....)

Pound falls from 10-month high against dollar because of fears about political disarray https://t.co/3oTQQxcgLo pic.twitter.com/dVaOmz9ZdM

UK-EU Brexit discussions continue apace today, with the relationship seemingly souring amid critical comments from Boris Johnson and a drive from France towards a hard Brexit.

There is now a clear need to get a transitional deal into place, with the negotiations looking ever more unlikely to conclude satisfactorily within the two-year deadline.

10.28am BST

It's official! Inflation across the eurozone eased a little last month.

The eurozone's consumer prices index rose by 1.3% in June, says Eurostat, matching last month's 'flash' estimate.

Euro area annual inflation confirmed at 1.3% in June (May 1.4%) #Eurostat https://t.co/8SszPc9vS9 pic.twitter.com/0T7NEMsgGH

10.13am BST

China's growth figures are often treated with some scepticism.

Analysts often question whether the data can really be trusted, given the temptation to massage bad date and the sheer challenge of measuring economic output over such a huge economy.

It was the monthly data which impressed, with Retail Sales at 11.0% y/y posting its strongest growth since December 2015, and all the more robust given that this is a value not a volume measure, and CPI inflation has been very subdued in recent months.

Industrial Production 'smashed' forecasts at 7.6% vs. expectations of an unchanged 6.5% y/y, with the breakdown highlighting strength in 'new economy' (Telecoms/Computing 13.1% y/y vs prior 10.3%), Pharmaceuticals (13.6% vs./ 10.75) and the volatile / seasonal Food sector 11.0% vs. 7.6%), while resource processing sectors' output remains subdued, which can only be considered to be healthy.

9.33am BST

UK construction companies are rubbing their hands with glee this morning after winning contracts for Britain's new HS2 high-speed rail line.

Related: HS2 contracts worth 6.6bn awarded by UK government

9.17am BST

Shares in ITV have jumped to the top of the FTSE 100 leaderboard, after the broadcaster snaffled Carolyn McCall from easyJet to be its next CEO.

"In a very impressive field of high-calibre candidates, Carolyn stood out for her track record in media, experience of an international operation, clear strategic acumen and strong record of delivering value to shareholders.

I'm delighted we'll be working together at ITV."

Related: Carolyn McCall to become ITV chief executive

8.42am BST

European stock markets have opened higher, thanks to China's growth figures.

Overnight there was a quartet of important Chinese figures, led by a better than expected 6.9% GDP reading.

That was joined by a far stronger than forecast industrial production number, an 11% increase in retail sales year-on-year and solid fixed asset investment figure.

8.29am BST

China takes in a lot of raw materials, to drive its factories and underpin its infrastructure spending.

8.17am BST

Craig James, chief economist at Commonwealth Securities in Sydney, says China's latest growth figures may indicate that the world economy is holding up.

He says (via Reuters):

"(The new data) is encouraging for global growth as well because China is the second largest economy on the planet."

"Based on this data, there is no need for easing and no need really for tightening either because inflationary pressures are very much contained. So I think the People's Bank of China just continues to be watchful."

As China goes, so go emerging markets. Its solid growth reinforces recoveries for commodity exporters and keeps 2017's pick-up in global growth on track,"

China Q2 GDP was firmer than expected (6.9%y/y, cons 6.8%, prior 6.9%), driven by a sizeable pick-up in industrial production. Sentiment was dampened by the Stats Bureau's acknowledgement that H1 economic growth was "hard won".

Our Asia strategist calls that an understatement to be sure; GDP growth was clearly buffered by significant credit expansion to ensure headline growth remained at or above target. Most recognise the dangerous imbalances/can-kicking involved in China's growth strategy.

8.05am BST

The news that China's GDP beat expectations drove shares up across Asia, although ironically Chinese investors didn't share the enthusiasm.

The Hong Kong Hang Seng rose by 0.3%, while Korea's Kospi and India's Sensex gained almost 0.4%.

Hurray, new week, new record! MSCI All World has just hit fresh ALL-TIME high as econ momentum in China boosted optimism for global growth. pic.twitter.com/CDGMGESa0K

This after six years of slowing, suggesting successful management of stimulus.

"It's reverse psychology," said Hao Hong, managing director and head of research at BOCOM International. "If everything is fine, you don't have to inject liquidity. But if they're injecting liquidity, something must be wrong."

7.51am BST

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

China has got the new week off to a good start, by releasing growth figures that beat City expectations.

Overall, the economy continued to show steady progress in the first half...but international instability and uncertainties are still relatively large, and the domestic long-term buildup of structural imbalances remain.