Risks of UK recession 'are increasing', as Glaxo cuts 320 jobs - as it happened

All the day's economic and financial news, including new eurozone construction and US housing data

• Latest: Credit Suisse says UK could fall into recession
• Glaxo cuts jobs
• MP angry as biotech plans are axed

Earlier;

• The agenda: Markets at record levels ahead of ECB and BoJ
• Investors face quiet day, but Thursday could be dramatic
• Morgan Stanley beats forecasts
• European markets rise (a little)

5.42pm BST

With little in the way of real economic news, and with interest meetings from the Bank of Japan and European Central Bank due on Thursday, investors were in a cautious mood again. Even so, markets managed to move in the right direction. In Europe, they were lifted by a dip in the euro ahead of the ECB gathering, while in the US a stronger oil price helped to lift Wall Street. The technology heavy Nasdaq index even hit a new high, boosted by another move higher from Netflix. The final scores showed:

4.37pm BST

Joshua Mahony, market analyst at IG, is also cautious about the fall in US oil inventories:

US crude stocks posted their third greater than expected inventories drawdown today, as the effects of driving season continue to be felt. It is worth being careful to not read too much into recent US stockpile reductions, as seasonality effects typically see US drivers raise both mileage and air conditioning usage. News that Chinese demand is on the wane is certainly not what the bulls want to hear, and despite falling US stocks, we continue to see output rise globally irrespective of the conformity rate of the recent OPEC production quota.

4.05pm BST

David Madden, market analyst at CMC Markets UK, said:

WTI and Brent Crude oil surged higher after the oil inventory report showed a larger than expected decline. The energy information agency (EIA) revealed that US stockpiles of oil fell by 4.72 million barrels, and the consensus was for a 3.5 million barrel decline. Last week there was drop of 7.56 million barrels.

Traders would be unwise to overlook the fact that US oil production increased by 32 thousand barrels per day.

4.03pm BST

US crude stocks fell by more than expected last week, giving some support to the oil price.

Crude inventories dropped by 4.7m barrels compared to forecasts of a 3.2m barrel fall, while gasoline stocks were 4.4m barrels lower. Analysts had expected a decline here of 655,000.

3.27pm BST

Credit Suisse has sent a shiver through the City this afternoon, by warning that Britain is 'flirting with recession'.

In a new research note, Credit Suisse argues there is a roughly one-in-three chance that Britain's economy falls into recession later this year, as the economy continues to slow.

Credit Suisse: chance of UK recession in next 6 months is 25%-38% (range of models). BoE hike of 25 bps would increase that by 5%.

That [a recession] is not our central scenario, but the risks are increasing, and the volatile political backdrop and unpredictable Brexit negotiations have increased the uncertainty of our forecasts. The reasons for expecting a recession post the EU referendum in the UK continue to haunt the economy.

We acknowledge that the recession we forecast in the aftermath of the referendum did not occur. But the channels that we thought would drive negative growth - an inflation-driven squeeze on consumer spending and weaker business investment as a result of Brexit uncertainty - are materializing, albeit later than we expected.

Credit Suisse says models indicate 25-38% chance of UK recession in next 6 months (+5% pts if BoE hikes rates) pic.twitter.com/wAN3a21Zdd

2.43pm BST

Over in New York, shares have hit fresh record highs at the start of trading.

The S&P 500 index, and the tech-focused Nasdaq, both pushed higher.

BREAKING: S&P 500, Nasdaq open at new all-time highs https://t.co/HFOc7W1X3V pic.twitter.com/ak9BnVLGCe

2.34pm BST

Over in the US, there are some upbeat housing numbers in the wake of Tuesday's fall in housebuilder confidence.

Housing starts in June rose by 8.3% compared to expectations of a 6.2% increase. This means new houses are being built at the fastest rate in four months.

2.13pm BST

Although Glaxo is selling Horlicks in the UK, it is retaining its Indian operation where the malted drink is growing more popular by the day.

That's according to Reuters, which explains:

In Britain, where Horlicks is sold as a bedtime drink, the product has largely fallen out of favour and sales are very limited.

Indian demand for Horlicks, by contrast, is strong and GSK has developed the malted barley milk drink into its top consumer brand in the country.

1.56pm BST

Glaxo's decision to abandon plans to build a new factory in Cumbria is a major blow to the area.

Five years ago, GSK announced it would create a new "state-of-the-art biopharmaceutical manufacturing facility" at Ulverston. The site was expected to cost around 350m, and create 500 permanent jobs.

"A major investment that will create many highly-skilled jobs and provide a huge boost to the area."

Shocking for UK manufacturing. David Cameron launched this on Budget day 2012, was to be the first new GSK plant on UK soil for 30 years https://t.co/pkKuAoC0lo

GSK told me no Ulverston jobs immediately affected. They'll look for buyer for the site. Calling emergency meeting of town tomorrow morning

1.36pm BST

Breaking: Pharmaceuticals group GlaxoSmithKline is cutting more than 300 jobs in the UK.

The company has announced details of a plan to "improve the efficiency and competitiveness of its manufacturing network".

Terrible news that GSK pulling out of biopharm investment in Ulverston. Speaking to their head of global manufacturing shortly.

This new investment is in addition to the 275million announced last year and investment of over 1.2billion in UK manufacturing since 2012.

Overall, GSK employs a total of around 17000 people across the UK of which 5000 are in UK manufacturing operations. The proposals announced today for Worthing and Slough will result in a reduction of approximately 320 permanent jobs over the next 4 years.

None of the announcements made today by the company have resulted from the UK's decision to leave the European Union.

12.25pm BST

Morgan Stanley's results have cheered the markets:

Could #MORGANStanley be one of the better performing U.S. bank shares post Q2? Shares up 2.3% pre-market after mostly solid results

12.20pm BST

Newsflash from Wall Street: Morgan Stanley has become the latest bank to warn that bond trading has struggled.

But that hasn't stopped the bank beating expectations with its financial results for the last quarter....

#MORGANStanley Q2 EPS beats foerecast: 87c vs 76c expected. Revenue also beats: up to $9.5B vs $8.9B in Q 22016; consensus was $9.09B ^KO

11.33am BST

Over in Paris, the governor of the Bank of France has dropped a hint that the ECB will take a cautious approach at this week's meeting.

"We have made progress, but we have not yet reached the target and so there is still a need for our accommodative monetary policy...

We are adapting its intensity depending on the economic situation and progress towards the target.

Ce matin, audition de Franiois Villeroy de Galhau, Gouverneur de la Banque de France en commission des finances. pic.twitter.com/eQlbYFbqFR

10.52am BST

European stock markets have crept higher, helping to keep global stocks at record levels.

In London the FTSE 100 has gained 6 points, with Reckitt Benckiser leading the way following the sale of its food business.

A record high for the Nasdaq and a fresh overnight surge in the euro's ongoing rally will be the key themes on an otherwise relatively quiet day. As the ECB meeting gets closer, the market's attention will increasingly focus on the likelihood of any further hawkish commentary from the central bank that could squeeze the euro even higher against the dollar.

European markets failed to capitalise on last week's rally, hamstrung by euro strength, so the hope for this particular crowded trade is that Mario Draghi will row back on the change in language from earlier in the month. Given the bank's predilection for easing, it seems unlikely that they will err too much on the hawkish side.

10.20am BST

Quite....

Not much on the agenda in terms of economic news but it could be the calm before the storm with BoJ and ECB taking centre stage tomorrow ^FR

10.07am BST

Newsflash: Europe's construction sector cooled a little in May.

Construction output across the eurozone shrank by 0.7%, compared to May, due to a 0.9% decline in civil engineering and a 0.7% drop in building construction by 0.6%.

The largest decreases in production in construction were recorded in Slovenia (-10.6%), Sweden (-7.1%) and Slovakia (-4.9%), and the highest increases in Hungary (+7.6%), Bulgaria (+3.6%) and Italy (+2.7%).

Euro area construction -0.7% in May over April; +2.6% over May 2016 #Eurostat https://t.co/gepExG0pVb pic.twitter.com/OW6kajrGk6

9.59am BST

Hot news for sauce lovers! Consumer giant Reckitt Benckiser has sold off its food business in a deal worth $4.2bn (3.2bn).

The division, which produces French's mustard, Franks' RedHot and Cattlemen's sauces, has been gobbled up by America's McCormick & Co - which owns Schwartz herbs and spices.

The US owner of Schwartz herbs and spices has won the battle to acquire Reckitt Benckiser's food business https://t.co/HMjBpU8k7u pic.twitter.com/pWwYJAK6ch

9.52am BST

Peter Rosenstreich of Swissquote Bank predicts that the Bank of Japan will reaffirm its commitment to loose monetary policy when it monetary policy meeting ends tomorrow.

While most major central banks have begun tightening money supplies, the BoJ has not. The Central bank has been unable to boost inflation to its target of 2%, and success is not in sight for 2017-2018. The Bank is likely to focus on controlling the yield curve, one of its primary targets will be to pin 10-year government bond yields at 0%....

9.38am BST

Australia's stock market had a good day, driven by its banks.

Shares in Australia's largest lenders rallied after regulators unveiled new capital requirements which are less onerous than feared.

"The new requirements look relatively benign," said Anthony Ip, a credit analyst at Citigroup Inc. "The majors may well be able to meet the new requirements organically without equity raisings, assets sales or changes to dividends."

ANZ Bank shares rose as much as 4.2 percent, the most in more than eight months, and Commonwealth Bank added 3.4 percent. National Australia Bank rallied as much as 3.7 percent and Westpac climbed as much as 4 percent.

9.26am BST

The euro is dipping this morning, down 0.2% against the pound at 88.4p.

That suggests that traders expect the European Central Bank to calm expectations that it might rein in its stimulus programme soon, at tomorrow's meeting.

"A strong euro has also raised expectations that they will not sound overly hawkish."

8.47am BST

The US dollar's weakness has boosted the Chinese yuan.

Beijing just fixed its currency at the strongest level in nine months, as Trump's healthcare woes continue to weigh on the greenback.

Hey guys, remember the yuan fixing? Today's was the strongest since Oct 2016, 6.7451 vs 6.7611 with $BBDXY weakest since Aug 2016 CNY $CNH pic.twitter.com/xZIfLZnZ0I

8.36am BST

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

Any comments which are perceived are more hawkish then expected could result in further pressure on the US dollar. The dollar is also weaker against the yen and the pound."

Good morning from Berlin. Global stocks retest record highs. Asia mkts rise on China optimism. #Euro bulls cautious ahead of ECB on Thursday pic.twitter.com/epX0z2jEs8

The Trump administration is also helping by appearing to undermine the US dollar at every available opportunity with what can only be described as either incompetence or sheer stupidity. Another failure to enact policy reforms this time on health care is raising serious questions as to whether this administration will deliver on any of the promises it made at the end of last year, with serious doubts now being expressed about tax and banking reform.

It seems that even with a majority in both Houses the Republicans appear unable to even agree amongst themselves as to what is best for the US economy. It appears that the US government is giving the UK government a run for its money in the incompetence stakes. It doesn't help that neither country has a competent opposition to offset this.