US economy contracts thanks to strong dollar and poor weather -as it happened

US GDP shrank by an annualised rate of 0.7% in the last quarter, new data shows

• Latest: US GDP falls by 0.7%
• But analysts aren't worried
• Summary: Greece in recession as bank deposits fall
• Schauble: Greece has until 30 June....

6.33pm BST

The continuing uncertainty over Greece as talks to resolve its financial crisis continue over the weekend has pushed shares sharply lower once more. The usual conflicting comments from various parties unsettled investors, with an increasing number of insiders now talking about a possible Greek exit from the eurozone. Added to the downbeat mood were US figures showing GDP contracted by 0.7% in the first quarter. The final scores showed:

4.45pm BST

More optimism from Greece:

*GREECE WILL MAKE JUNE 5 PAYMENT DUE TO IMF, GREEK ECONOMY MINISTER STATHAKIS: REAL

3.45pm BST

Back to Greece, and the country could still stay in the euro even if it defaults (remember it has a1.6bn to pay to the IMF next month.)

That's the view of Moody's ratings agency in a note seen by the Financial Times. It quotes Moody's saying: "A Greek exit from the euro is not an inevitable consequence of default. The decision to split would be a political act."

3.31pm BST

Odds of a Fed rate hike in December down to 55% after negative GDP print and Chicago PMI miss. pic.twitter.com/r5E1ykVQcM

3.24pm BST

Here's our story on the US GDP figures:

A harsh winter, a strong dollar and falling oil prices took their toll on the US economy in the first quarter, the Commerce Department revealed on Friday.

US gross domestic product (GDP) - the broadest measure of economic growth - shrank at an annualized rate of 0.7%. The Commerce Department had previously estimated output grew 0.2% from January through March.

Related: US economy shrinks 0.7% in first quarter as strong dollar eats into growth

3.09pm BST

And to make a trio of disappointing US numbers, consumer confidence fell to a six month low in May.

The University of Michigan consumer sentiment index fell to 90.7 from a revised 95.9 in April, the biggest decline since the end of 2012.

3.00pm BST

Chicago PMI plunges to 46.2 in May. That's two sub-50 readings this year. Recession signal? pic.twitter.com/Yvp4bwaTOk

2.47pm BST

More downbeat numbers from the US.

The Chicago Purchasing Managers Index came in at 46.2 in May, compared to 52.3 the previous month and forecasts of a figure of 53. This is the lowest level since February.

2.44pm BST

Wall Street has opened lower after the revision of the US GDP figures to show a contraction in the first quarter.

The Dow Jones Industrial Average is curently down around 50 points or 0.28%. But analysts are not getting too concerned about the US numbers. Dr Harm Bandholz at Unicredit said:

Now we have it in writing: The US economy had another dismal start into the year, with real GDP shrinking an annualized 0.7%. This marks the third time in the past five years that first-quarter GDP growth in the US was negative. As there has been no other quarter with negative GDP growth during that time, the debate about potentially flawed seasonal adjustment procedures has been heated. The Federal Reserve, however, did not find any evidence of material residual seasonality, and blamed instead "statistical noise, unusually harsh weather, and other idiosyncratic factors" for this recurring pattern. We agree and think that transitory factors, such as the inclement weather and the port strikes, played the major role.

The fundamentals for a solid acceleration of the US economy all remain in place. This holds true in particular for consumer spending, the main growth engine. In addition to a continuation of solid payroll gains and an ongoing acceleration in wage increases, we expect the savings rate to reverse its latest increase. This gives another boost to consumer spending. Moreover, the Federal Reserve highlighted in its latest minutes that "business contacts in several parts of the country continued to be optimistic and expected sales, investment, and hiring to expand over the rest of the year." To be sure, while the anticipated rebound in the data is beginning to materialize right now, it started some weeks later than we originally thought. This may affect the quarterly growth pattern (with slightly weaker growth in the second quarter of 2015, and stronger gains in the second half of 2015). But overall, we remain confident that real GDP growth between the second quarter of 2015 and fourth quarter of 2015 will average 23/4% to 3%.

2.35pm BST

Back with Greece, and could there really be hopeful signs that things could finally be resolved? Or is any optimism still on the Greek rather than the creditor side?

Multiple reports indicate real progress at Brussels Group talks on #Greece. The 'final stretch' may be really near this time.

2.22pm BST

And it's not just the US and Canada:

Not the best of lunch time #GDP updates as Brazil also announces that its economy shrank too http://t.co/3BTHgMohyE #weatherreport

2.18pm BST

My call that there will be no rate rises in U.S. Or UK in 2015 seems on track deflation no wage growth and slowing in GDP growth a clincher

2.17pm BST

U.S. GDP Growth 1948-Present (with Recession Shading): pic.twitter.com/iRZcPTzwxP

2.02pm BST

Canada's economy also struggled in the last quarter.

New data shows its GDP shrank by an annualised rate of 0.6% in January-March, the biggest contraction since 2009.

Higher debt, shrinking economy, huge trade deficit, poor tax policy. All indicators point to #Harper economic failure http://t.co/UksDz5bEpO

1.58pm BST

US consumers still drove the economy forward, as this breakdown shows:

Here's how we got to -0.7% #GDP in Q1: Consumption: 1.23 Biz investment: 0.12 Trade: -1.9 Government: -0.2

1.56pm BST

Bad weather, less investment in oil exploration, and a port strike all drove the US economy into contraction, says Nancy Curtin, chief investment officer at Close Brothers Asset Management.

She agrees that growth should now be picking up:

"Confidence has rebounded, the job market is buoyant and robust housing market data of late offers a much brighter outlook than the first quarter figures suggest. Equally, lower oil prices should contribute to an uplift in consumer spending, further boosting growth as the year progresses.

Thanks to the fundamental strength of the economy, the Fed seems resolved to hike rates this year, although this will be patient and incremental, rather than drastic."

1.47pm BST

The US economy is expected to bounce back in the current quarter, avoiding a recession.

Chris Williamson, chief economist at Markit, says recent data has been encouraging:

"The decline has already been largely shrugged off as a temporary blip by policymakers, linked to extreme weather, port closures and what looks to be a regular pattern in the official data of the economy weakening at the start of the year. Survey evidence is already pointing to a second quarter pick-up.

Markit's flash PMI data, for example, have signalled robust growth, especially in the service sector. The monthly data are running at levels broadly consistent with 2-3% annualised GDP growth in the second quarter. Job creation has also held up surprisingly well."

1.41pm BST

Should we panic that economic activity across America fell last quarter?

Dennis de Jong, managing director at UFX.com, says no.

"Fed Chair Janet Yellen will know that particularly poor winter weather, a strong dollar and an unstable energy sector weighed heavily on the data and all signs point to an immediate and strong turnaround.

Once consumers start to spend the extra cash generated by cheaper gas prices as expected by many, Yellen and Co. will start to think seriously about raising interest rates.

1.39pm BST

As I was saying...

Trade was the biggest spoiler for US growth in Q1, with the gap at its biggest in 30 years: http://t.co/clnOOZcBFX pic.twitter.com/aGWUAFXQSp

1.37pm BST

The US economy is suffering from the strength of the dollar.

This new data shows that exports shrank by 7.6% during the quarter, while imports rose by 5.6%. The resulting trade gap is a drag on GDP.

1.34pm BST

The fall in US GDP isn't quite as sharp as feared, but it still shows the world's largest economy hit a soft watch over the winter.

US Q1 #GDP (second estimate): -0.7% vs. -0.8% consensus.

1.32pm BST

BREAKING: The US economy contracted in the first three months of the year.

Revised data shows that US GDP actually shrank by 0.7% on an annualised basis (or around -0.17% in true quarter-on-quarter terms).

1.18pm BST

Time for a very brief recap, before we get the US growth (or non-growth?) figures at 1.30pm BST.

Greek bank deposit levels have fallen to their lowest level in over a decade, as fears intensify that it could face capital controls or a default without a deal with creditors soon.

1.16pm BST

Here's our latest news story, wrapping up all the main developments

Related: Stock markets unsettled by Greek debt deal uncertainty and cash exodus

1.05pm BST

Greece needs to step up and produce a credible set of reforms, to pave the way to a deal, says Treasury secretary Lew.

Strong stuff from Jack Lew telling Greeks to put forth a credible plan.

1.01pm BST

Jack Lew sounds exasperated with the lack of progress over Greece this year.

Too much time has been wasted this year, the US treasury secretary tells reporters at the G7. Both sides need to get serious, fast.

Jack Lew on Greece at #g7finance: too much time spent unproductively since January, serious talks from both sides needed, sooner the better

12.57pm BST

US Tsy Sec Lew says it's possible that June 5 is not the real deadline for #Greece

12.57pm BST

Jack Lew is also warning that the consequences of Greece leaving the eurozone can't be fully predicted.

That's a message he also hammered home in London on Wednesday.

12.55pm BST

US Treasury secretary Jack Lew is now giving a press conference in Dresden - and begins by subtly chiding Germany over its trade and budget surpluses.

#g7 #Lew indirectly telling German hosts to spend more. Just led off on surplus nations doing more. pic.twitter.com/Gbb5ZM6dtS

12.35pm BST

Wolfgang Schiuble is fielding more questions on Greece.

He tells reporters at the G7 meeting in Dresden that although other European leaders may have "different views with the Greek leaders", we all share a common responsibility for Europe.

The Greek government are the representatives of the Greek people, and that is why they deserve respect.....

I have no personal problem with my colleague [Greece's Yanis Varoufakis].

Schaeuble describes his relationship with Yanis as: "not a marriage of love"

12.22pm BST

Here's confirmation that EC president Jean-Claude Juncker has predicted a Greek deal soon...

.@JunckerEU at #EUJapan summit presser: "On #Greece, we will find a solution in the coming days or weeks." pic.twitter.com/cqMZWFKel5

12.16pm BST

Schaeuble and Yanis finally singing from the same hymn sheet. Say actual deadline for deal is June 30.

Schiuble: The Greek programm ends at the end of June. And then added "as things are now". They could change /via @telloglou #Greece

12.13pm BST

Onto questions...

How much time is left to get a deal with Greece?

12.11pm BST

Weidmann says that the G7 policymakers see "considerable merit" in establishing a bankers code of conduct, to address the string of recent scandals.

These scandals relate to the mindset in the financial industry, and the misconduct individuals. And individual integrity and good conduct is beyond the reach of regulation.

12.06pm BST

The task of reshaping the global financial system after the crisis is not finished, says Weidmann.

Policymakers at the G7 meeting agreed to press on and complete the job, including removing the problem of "Too big to fail" banks.

12.02pm BST

Bundesbank president Jens Weidmann now gives a statement.

We can't blame bad luck for the disappointing economic growth seen across the world economy in recent years, Weidmann says. He cites demographic factors, weakening productivity growth as factors that have hurt potential growth in recent years.

12.00pm BST

We had a brief discussion on Greece, Schiuble says, only for a few minutes.

And then he takes a pop at Athens, saying that the positive noises out of Greece do not match what the G7 was told by the institutions

LOL Schaeuble "Greece talks at G-7 only took a few minutes"

Schaeuble: "positive news from Greece does not correlate with what we hear from the institutions". Adds G7 only spent "few mins" on t topic

11.56am BST

We stand ready to help Nepal after the tragic earthquake this month, which may include debt relief, says Schiuble.

11.55am BST

We had a very intensive debate on terrorist financing, Schiuble continues. He cites virtual currencies as an area of concern.

11.54am BST

Schiuble: We all agreed on need for structural reforms for higher growth. "Public investments also needed" #G7finance pic.twitter.com/Itkjf89ALY

11.54am BST

On tax issues, we agreed that we must co-operate to boost tax fairness, and to improve cooperation between national tax bodies, Schiuble tells the G7 press conference.

It is feasible to make progress here, and to improve everyday tax administration. We need to work more with developing countries too.

11.50am BST

Schiuble speaks first, saying the G7 meeting was "most successful".

Of course, the ministers, central bank governors and economists didn't agree on everything....they never do. But we had a fruitful discussion on how to boost economic growth and make the global economy more resilient.

11.47am BST

The G7 closing press conference with Wolfgang Schiuble and Jens Weidmann is starting now.

This live feed has an English translation

11.44am BST

A flurry of quotes from EC president Jean-Claude Juncker just hit the wires; none of them suggest a breakthrough is imminent (he's in Toyko for a Japan-EU summit)

Juncker Says Greece Aid Negotiations Are `very Difficult' Cos ones speaking in Greek and one in German !

*JUNCKER: GREECE ISSUE TO BE SOLVED IN `COMING DAYS AND WEEKS' - keeping options open then?

11.27am BST

The selloff in Europe's stock markets is accelerating, as investors fret about Greece.

The German DAX is the worst performer, down over 1%.

European markets continued to feel the ongoing effects of the situation in Greece, with fresh fears that the country will be unable to make yet another repayment due to the IMF. The Greek government has still not made it clear how it intends to make the a1.6 billion repayment, the first tranche of which falls due next Friday.

11.04am BST

Heads-up: Germany's finance minister and central bank chief will be giving a press conference at the G7 meeting in Dresden, in around 40 minutes time.

Live at 12:45 press conference on #g7finance in Dresden with Wolfgang Schiuble and Jens Weidmann http://t.co/QJSroxaDYc

10.55am BST

Greece's long slump is even worse than the Great Depression of the 1930s....

ELSTAT confirms another recession in Greece. And it was already doing worse than the US Great Depression. pic.twitter.com/cx6jLuARoc

10.19am BST

More gloom for Greece -- statistics body ELSAT has just confirmed that the country is back in recession.

Updated GDP data showed that the Greek economy shrank by 0.2% in the first three months of 2015, in line with the initial estimate earlier this month.

9.53am BST

Last month's hefty withdrawals are part of a wider pattern.

Greek banks have been suffering deposit outflows since December 2014, when the previous government called a general election after failing to elect a new president.

Greek bank deposits fell another 4% in April. The problem is the euro leaving Greece, not Greece leaving the euro. pic.twitter.com/ynZz4UdzHT

9.43am BST

In a sign of the times, Greek bank deposits have fallen to an 11 year low as the IMF repayment looms next Friday #Greece #bank #Grexit

9.37am BST

Worried Greeks pulled a5.6bn out of their accounts last month, as the country's banks continue to bleed.

Official data just released shows that Greek bank deposits fell to a139.4bn in April, down from a145bn in March.

CHART: #Greece bleeding continues. New OFFICIAL data show bank deposits down (again!) by 6 bna in April. 11-year low. pic.twitter.com/zmqoiQpKV5

Won't be much left in #Greece's banks by the time #ECB gets the keys. Deposits down another a5.6 billion in April. pic.twitter.com/bN0qk0Pesm

9.15am BST

The picture is brighter in Italy this morning. The Italian stats office has just confirmed that the economy grew by 0.3% in the last quarter.

That's in line with the initial estimate two weeks ago, and means Italy's economy expanded for the first time since autumn 2013.

#Italy GDP grows for 1st time in 6 quarters by 0.3% - been in/out of recession/negative quarters since 2009/10 crisis http://t.co/fko7vCezC2

9.11am BST

Yanis Varoufakis made some interesting points in his interview with Vima FM radio station, and a couple of perplexing ones.

He said:

#Greece MinFin Varoufakis: "Our side on BrusselsGroup opposed with vigor the proposal re: a transaction tax." @vimafm

Varoufakis claims that if new taxes introduced, they are not recessionary if they involve redistribution. Oh well...

#Greece MinFin Varoufakis, when asked whether we got the money to pay the IMF, he says "let ME the MinFin worry about this, not the people!"

8.58am BST

You can hear Yanis Varoufakis's radio interview here (it's in Greek.....)

Thanks, Greek Analyst!

Link on #Varoufakis's live interview at @vimafm here: http://t.co/jiNaoOOMz2 cc @graemewearden HT @YanniKouts

8.49am BST

Greek finance minister Yanis Varoufakis is speaking on Greek radio now.

I'm afraid I've not got the link, but the key points are being tweeted:

#Greece FinMin says very close to completing Greek program review; Greek talks have new developments every day ~@vimafm

#Greece FinMin Varoufakis says there is agreement with the 'Institutions' on VAT model; no agreement yet on rates ~@vimafm

8.46am BST

As if the Fifa scandal wasn't bad enough, Switzerland has been hit with the news that its economy is shrinking.

Swiss GDP fell by 0.2% in the first three months of the year, worse than the stagnation which economists expected.

"The trade balance in goods and services in particular delivered negative growth contributions."

8.40am BST

More news from the G7 meeting in Dresden, from French finance minister Michael Sapin.

*SAPIN SAYS EUROPE NEEDS GREECE DEAL WITHIN 'DAYS OR WEEKS'

8.32am BST

Worries about Greece are weighing on Europe's stock markets again. They're mostly down in early trading:

I suspect there will be plenty of headlines about Greece driving volatility in coming weeks as a1.6 billion is due over four tranches.

8.17am BST

What about Christine Lagarde's comment that Greece could leave the euro, Commissioner Moscovici?

We are dedicated to have Greece staying in the eurozone, a solid Greece, a reformed Greece.

8.05am BST

European commissioner Pierre Moscovici is the first policymaker to break cover from the G7 this morning.

He told CNBC thatthere's been "good progress" between Greece and lenders.....

*MOSCOVICI SAYS IT'S CLEAR TIME IS RUNNING SHORT ON GREECE

*MOSCOVICI SAYS 'WE'RE NOT YET THERE' ON GREEK PENSION REFORMS

7.49am BST

Greece's deputy prime minister, Yannis Dragasakis, has claimed that 'political will' is the missing ingredient needed for a deal (explaining why his boss phoned the leaders of Germany and France last night)

Greek Dep PM Dragasakis: Political will is missing on Greece deal --Corriere della Sera via BBG

Dragasakis: Greece is willing to pay its debts, but is against new austerity

7.44am BST

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

We're coming to the end of another week that started with hopes of a breakthrough between Greece and its creditors, but has seen little evidence of progress since.

Related: Grexit is a possibility, warns head of IMF

The three leaders spoke for about an hour and government sources referred to "a positive climate."

The exact content of the conversation remained unclear but it is thought Tsipras asked Merkel and Hollande to make good on a pledge they made at an EU leaders' summit in Riga last week to help overcome potential obstacles in the negotiations.