IMF's Lagarde warns global economic growth is slowing - as it happened
IMF chief warns emerging markets will be hit by extended period of low commodity prices
- Markets suffer $11tn selloff in worst quarter since 2011
- 1.2m UK cars caught up in Volkswagen scandal
- Eurozone back in deflation due to cheaper oil
- Analyst: Emerging market gloom is deepening
6.21pm BST
With this, we are wrapping up for the day. Good-bye and thank you for all your great comments. We'll be back tomorrow.
6.09pm BST
Commissioner Jonathan Hill, the EU's financial services chief, said:
Europe's economy is about the same size as America's, but our equity markets are less than half their size. In the US, SMEs get about five times as much funding from the capital markets - or non-bank financing - as they do here in the EU.
And if our venture capital markets were as well developed as they are in the US, companies could have raised an extra EUR 90 billion over the past five years. And perhaps even more importantly, the differences that there are between EU Member States are greater than the differences between the EU and the US.
5.57pm BST
The European Commission published its action plan on the Capital Markets Union initiative today, as expected, to create a "true single market" for capital access across the core 28 EU member states.
The Bank of England said in response:
We consider this Action Plan to be a further important step in moving closer to a single, integrated capital market in the EU, although we are yet to review the Commission's detailed proposals. CMU requires carefully planned measures combining early quick wins to maintain momentum and sustained effort over a number of years, all in a very wide range of areas, and we therefore welcome the Commission's step by step approach.
In the short term, the proposed Regulation on a European framework for simple, transparent and standardised securitisation, represents a significant milestone. Given the potential implications for financial stability at European and domestic level, we have worked with the European Central Bank to promote a sustainable model of securitisation and support the European Commission's proposal on an EU framework for securitisation as part of the longer-term objective of growth in stable, market-based financing markets alongside bank lending."
5.55pm BST
Over in Greece, newly re-elected prime minister Alexis Tsipras has predicted that the crisis-plagued country could soon be returning to international markets - if a deal on its debt burden is reached by the end of the year. Our correspondent Helena Smith reports from Athens:
Greece's return to the capital markets from which it has been shut would essentially mark the end of its great economic crisis.
Barely ten days after his triumphant return to power - and before his new administration has even had time to make its policy statements before the Greek parliament - Alexis Tsipras has announced that his government's goal is to return to markets once it has sealed a deal over its monumental debt.
5.04pm BST
Global markets have suffered their worst quarterly performance since the depths of the eurozone crisis in 2011, with an estimated $11tn (7tn) wiped off the value of world shares, despite a bounce today. Our markets correspondent, Nick Fletcher, writes:
After a summer of wild swings, sparked by growing fears of a slowdown in China, leading shares have slumped from the record highs of a few months earlier, and are on track for their second quarterly decline in a row.
The MSCI all-country world index, which monitors 23 developed and 23 emerging markets, has fallen nearly 11.5% since 30 June, marking its poorest quarterly outcome since the three months to September 2011.
4.57pm BST
Markets have shrugged off warnings from IMF chief Christine Lagarde about the slowing world economy and rallied on the last day of a dismal quarter. Worries over Greece's debt crisis gave way to new fears over China's economic slowdown and market turmoil during the past three months.
Most European indices rose more than 2% today, while stocks on Wall Street leapt over 1%.
4.22pm BST
"There was no sign of slowdown this afternoon, with a 200 point jump for the Dow Jones continuing the Western indices' attempts to end this most awful of awful quarters with a bang instead of a more apt whimper," says Connor Campbell, financial analyst at Spreadeax.
Perhaps this evening's comments from Janet Yellen will provide more insight into what the US markets want at the moment; when the Fed chair suggested last week that a rate-hike will most likely occur in 2015 the American indices surged on the signs of some much-needed clarity. It will be interesting, then, to see if the markets have a similar reaction if Yellen drops any newsworthy nuggets of information into her speech in St Louis.
With the Dow continuing the end of quarter party, the European indices could maintain the muscular, if meaningless, growth that began this morning. The UK's supermarket sector, buoyed by better-than-expected profit-promising comments from Sainsbury's, only widened its gains as the day went on, whilst the commodity stocks continued to rebound from Monday's mayhem.
4.16pm BST
Strong labour market data in the US lifted the dollar, while the euro was already under pressure from the eurozone's return to deflation on the back of weaker oil prices.
The euro is trading 0.7% down against the dollar at $1.1170. It also dropped against the pound, by 0.6% to 78.83p.
4.08pm BST
Global equities are rallying on the last day of a bad quarter. Jasper Lawler, market analyst at CMC Markets, sums up today's developments in the UK and European stock markets.
There was a healthy sense of relief about the move higher in European shares on Wednesday. For a minute there on Monday, stocks were on the precipice of another China-induced thrashing. The past two days have just not produced the catalyst for the follow-through to the downside.
A melt-up in copper prices which surged over 4% helped commodity-trader Glencore to another day of double-digit gains. Other mining stocks followed suit with Rio Tinto a top riser after the sale of its coal mine stake in Australia to New Hope. The mine sale gave Rio's balance sheet a welcome boost in the context of fears of over-leverage in the sector.
4.03pm BST
The IMF chief concluded her speech by quoting from the organisation's founding father, John Maynard Keynes. In the midst of the 1930s Great Depression, he wrote this:
'It is common to hear people say that the epoch of enormous economic progress is over. But I believe that is a wildly mistaken interpretation of what is happening to us.
We are suffering not from the rheumatics of old age, but from the growing pains of over-rapid changes, from the painfulness of readjustment between one economic period and another.'
4.02pm BST
"So much for the diagnosis. What should be done?" Lagarde asks.
The risks can be managed by supporting demand, preserving financial stability, and implementing structural reforms.
3.58pm BST
Lagarde warned of a new "mediocre".
If we put all this together, we see global growth that is disappointing and uneven. In addition, medium-term growth prospects have become weaker. The "new mediocre" of which I warned exactly a year ago - the risk of low growth for a long time - looms closer.
Why? Because potential growth is being held back by low productivity, population aging, and the legacies of the global financial crisis. High debt, low investment, and weak banks continue to burden some advanced economies, especially in Europe; and many emerging economies continue to face adjustments after their post-crisis credit and investment boom."
The prospect of rising U.S. rates has already contributed to higher financing costs for some borrowers, including emerging and developing economies.
This is part of a necessary adjustment in global financial conditions. The process, however, could be complicated by structural changes in fixed-income markets, which have become less liquid and more fragile - a recipe for market overreactions and disruptions.
3.50pm BST
WATCH LIVE: Christine Lagarde discusses IMF policy http://t.co/HntreaVVqH pic.twitter.com/RuwGFUSC9N
3.43pm BST
IMF managing director Christine Lagarde has warned that a deceleration in emerging markets will cause global economic growth to slow this year. Bright spots are the eurozone and Japan, where growth is picking up, and the US and the UK, where growth is still solid.
She said:
Global growth will likely be weaker this year than last, with only a modest acceleration expected in 2016."
The good news is that we are seeing a modest pickup in advanced economies. The moderate recovery is strengthening in the euro area; Japan is returning to positive growth; and activity remains robust in the US and the UK as well.
3.22pm BST
Here's a chart showing the performance of major commodities so far this year, via market watch. And no, oil and metals are not the worst performers:
YTD commodities tally: #Rice gains the most, #lumber falls the most. http://t.co/KUE6mPfAh7 (Chart: @AdamKoos) pic.twitter.com/SXNjGQn8xg
2.58pm BST
But there has also been some weak manufacturing data from the US.
After contractions in manufacturing in the Empire, Philadelphia, Richmond and Dallas Federal Reserve regions in recent weeks, Chicago is the latest area to disappoint.
USA Chicago PMI announcement - Actual: 48.7, Expected: 53.0 pic.twitter.com/ruWR4Qis2S
Consensus forecast for mfg ISM is 50.6, risk is for sub-50 print. As latest trade data reminds us, a strong dollar has real consequences.
2.47pm BST
Wall Street has indeed opened sharply higher, in tandem with other global markets which are recovering some ground from their recent slump, writes Nick Fletcher.
The US markets have also been helped by better than expected jobs figures with the monthly ADP report showing private employers added 200,000 jobs in September, up from 186,000 in August. That suggests that we could see a strong non-farm payrolls number on Friday, easing fears that the US economy is weaker than expected.
2.26pm BST
My colleague on the Money desk, Miles Brignall, has done a helpful Q&A for UK consumers on which cars are affected by the Volkswagen emissions scandal and what they can do. You can read it here.
Which engines are involved?
2.16pm BST
The FTSE 100 index is still up strongly, boosted by Sainsbury's and other supermarket groups. Sainsbury's said today it is trading well and expects to beat annual profit forecasts. It is the top riser on the share index, up 13% or 29.9p at 259.2p. Tesco is up 6.8% while Morrisons is 5.6% ahead.
The FTSE is nearly 2.1% ahead at 6032.41, a gain of more than 120 points. Germany's Dax is up 2.4% and France's CAC has gained 2.7%.
2.11pm BST
Over in the US, Wall Street is set to open higher after strong labour market data. The ADP National Employment Report showed that private employers added 200,000 jobs in September, more than expected and up from 186,000 in August. This has boosted expectations of a strong payrolls number on Friday - the official data.
Fed chair Janet Yellen and St Louis Fed president James Bullard are due to speak at a conference in St Louis later today, and markets will be looking for any clues regarding the timing of the first interest rate hike in years.
1.53pm BST
... But Britain's recovery from its economic slump and the financial crisis has been slower than previous recoveries. Output is only 5.9% above its previous peak in early 2008. Adjusted for the growing population, it's just 0.6% higher.
1.40pm BST
Let's have another look at today's batch of UK data. Several bits of good news: living standards picked up, as companies spent more on wages and real household disposable incomes, adjusted for inflation, rose at the fastest rate in five years (3.7%).
Companies' wage bills rose by 4.7% in real terms, the biggest rise since before the financial crisis (late 2007), although this is partly due to people working longer hours and extra pension payments, according to the Office for National Statistics.
Admittedly, the economic recovery does not look to have maintained this pace in Q3. Indeed, the CIPS/Markit composite PMI points to quarterly growth of a more modest 0.5%. However, we expect that the recovery will pick up pace again soon. After all, business and consumer confidence remains strong, credit is cheap and becoming more available, and households are yet to spend all of their windfall from lower energy and food prices. The upshot is that we remain upbeat about the prospects for the UK's economic recovery."
1.06pm BST
The UK transport secretary, Patrick McLoughlin, said:
The government's priority is to protect the public and I understand VW are contacting all UK customers affected. I have made clear to the Managing Director this needs to happen as soon as possible.
The government expects VW to set out quickly the next steps it will take to correct the problem and support owners of these vehicles already purchased in the UK."
12.40pm BST
The BBC have done "a brief history" of Volkswagen, with pics. You can read it here.
12.37pm BST
In the wake of the VW emissions scandal, Consumers International, the federation for more than 240 consumer groups around the world, is calling on all global carmakers to come clean about in-car technology and its impact on emissions tests.
They are also demanding an urgent review of emissions and fuel efficiency tests, and the introduction of stronger oversight of manufacturers testing, and independent testing where necessary.
This scandal reflects long standing demands from many consumer organisations for more accurate testing of vehicles emissions and fuel efficiency and better oversight including independent testing where necessary. Regulators and manufacturers need to act urgently to restore consumers' confidence and trust in the car industry. Car manufacturers must step up and prove they have had no such similar breaches, and then spell out what they intend to do in the future to ensure they are meeting consumers expectations of openness and transparency.
This crisis underlines the need to build stronger and more effective regulations and testing protocols that defend consumers' rights and stop unscrupulous companies from cheating the system."
12.19pm BST
Time for a quick recap.
ECB will extend timeline for QE in December, HSBC reckons. S&P thinks the ECB will more than double the programme. http://t.co/6ytDdoj4QW
There are just too many anxieties for investors right now with this including concerns over a complete lack of timing for a US interest rate hike, fears over China entering a deep economic downturn, continual growth concerns in both Europe and Japan alongside depressed commodity prices.
The timely combination of all these factors together is exactly why I am refusing to believe that the overall market sentiment is going to transform into a positive one as we enter the final quarter of the year.
Related: VW scandal: 1.2m UK cars affected by emissions device
12.01pm BST
It's been a rough quarter for metals prices as well as for shares.
Gold has shed around 4% since July, to $1,122 per ounce, while platinum has shed 15% - its worst quarter since 2008.
12.00pm BST
Hopes that Europe's jobless crisis is easing have taken a knock today. The eurozone unemployment rate came in at 11% in August, not the 10.9% expected.
The Eurozone jobless rate in July has also been revised up to 11% from 10.9%, which is another disappointment.
11.51am BST
A reminder that Europe's weak inflation rate is part of a broader pattern:
global inflation rate...edging down pic.twitter.com/CzPqrKnNNN
11.17am BST
Here's a breakdown of the Volkswagen vehicles in the UK affected by the emissions scandal:
11.14am BST
Volkswagen says that the 1.1m UK drivers who own cars caught up in the emissions scandal will be contacted soon:
In the coming days, the VIN (Vehicle Identification Number) details of affected cars will be released to retailers.
In addition, a self-serve process for customers to check if their vehicle is affected will be set up.
11.07am BST
Breaking: Volkswagen has announced that over 1.1m cars designed to evade emissions testing were sold in the UK.
More than a million cars in the UK affected by Volkswagen scandal
UK customers with affected VW cars will be contacted in next few days about fixing issue
11.04am BST
One month's negative inflation isn't enough to spur the European Central Bank into its quantitative easing scheme.
So argues Bill Adams, senior international economist at PNC Financial Services Group, adding:
Despite the year-ago decline in headline inflation, this report does not meet the definition of deflation that ECB President Draghi has repeatedly cited this year: A self-perpetuating decline in prices that occurs across a wide range of goods and services.
10.58am BST
Today's inflation report is "disappointing news" for the European Central Bank, says Howard Archer of IHS Global Insight.
A marked relapse in oil prices and very weak commodity prices first undermined and then reversed the upward trend in Eurozone consumer prices that had seen it move from deflation of 0.6% in January to inflation of 0.3% in May.
It remains highly unlikely that Eurozone consumers will start to delay purchases in anticipation of falling prices; rather they are likely to continue to enjoy the boost to their purchasing power coming from mild deflation or low inflation.
10.38am BST
Mario Draghi must be disappointed that his a60bn-per-month bond-buying spree hasn't had a bigger impact.
The ECB launched its QE programme in January after inflation sagged to minus -0.6%. It did then turn positive in May, but has been stubbornly weak since:
#Eurozone back in technical #deflation. Inflation Rate Turns Negative as ECB Debates Stimulus http://t.co/TBab08lBwI pic.twitter.com/vUKnmhfLs9
10.24am BST
ECB president Mario Draghi has already hinted that more stimulus measures could be needed to stimulate the eurozone; today's inflation data means that's more likely to happen.
But I suspect the ECB won't be *too* alarmed that inflation has turned negative again, given that this is mainly due to cheap oil.
Euro-area inflation did drop below zero in September but core measure remains stable and services inflation rose. Much better than it looks.
10.09am BST
This is the first time in six months that the eurozone has experienced negative inflation:.
Here's the details from Eurostat:
Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in September (1.4%, compared with 1.3% August), followed by services (1.3%, compared with 1.2% in August), non-energy industrial goods (0.3%, compared with 0.4% in August) and energy (-8.9%, compared with -7.2% in August).
10.03am BST
Here we go! Prices across the eurozone fell by 0.1% year-on-year this month, putting the single currency region back into negative inflation.
As explained in the introduction, this may raise the chances of the ECB increasing its stimulus programme in the next few months.
Euro area inflation down to -0.1% in Sept 2015 (Aug +0.1%) - flash estimate from #Eurostat http://t.co/O6MrTccMZm pic.twitter.com/c1JVlP6QNS
Euro area flash inflation: Food +1.4%, Services +1.3%, Other goods +0.3%, Energy -8.9% in Sept 2015 #Eurostat http://t.co/O6MrTcuonW
9.59am BST
Some reaction to the UK growth data:
UK economy is 5.9pc bigger than pre-crisis peak, new ONS revisions show, up from 5.2pc previous estimate, as 2015 Q2 GDP confirmed at 0.7pc
UK annual GDP growth revised down to 2.4% from 2.6%. Every one of 35 economists polled by @Reuters expected no change or upward revision.
UK GDP in Q2 unchanged at 0.7% in final estimate; Current account deficit a lot smaller than expected (but still pretty massive) at 16.8bn
9.48am BST
Phew. Britain's alarmingly wide current account deficit has narrowed.
The gap between what the UK pays out to the rest of the world and what comes back in dropped to just 3.6% of GDP in the last quarter, down from 5.2% in January-March.
Current account deficit was 3.6% of #GDP in Q2, down from 5.2% in Q1 http://t.co/xPzcqUsCgV pic.twitter.com/F11VViJe70
A much more reassuring UK current account deficit from the ONS.
9.44am BST
Britain's Office for National Statistics has trimmed its estimate for UK growth last year.
It now believes the economy expanded by 2.9% - healthy enough, but not the 3% previously eyed.
9.34am BST
City analyst Louise Cooper says emerging market fears helped to wipe $11 trillion off global markets this quarter:
India is slowing, so much so the central bank cut rates earlier this week in a surprise move. China is slowing rapidly according to the data but its difficult to get a handle on exactly how much. Commodities prices are falling indicating this lack of demand.
The emerging markets have been important contributors to global growth over the years since the crisis, contributing something like 60% to global growth. The question is whether the US, Europe and Japan can grow enough to make up for their weakness? And what impact an emerging market slow down will have on the rest of the world? These are unknowns. We don't even know how serious the slowdown. Andy Haldane of the Bank of England believes this is the third stage of the global crisis. But no one knows the answers to those questions yet. Thust markets are volatile and investors and traders nervous.
9.16am BST
There's better news from Italy. The jobless rate has dipped to its lowest level since February 2013, dropping to 11.9% in August from 12% in July.
That's a good sign, ahead of the eurozone jobs data in 45 minutes.
9.12am BST
Is the shine coming off Germany's labour recovery?
Data just released shows that Germany's unemployment total rose by 2,000 this month, on a seasonally adjusted basis. Economists had expected a drop of 5,000.
#Germany #Unemployment Unexpectedly Rises in Sign of Economic Risks http://t.co/i3ozgUwJl5 via @aspeciale pic.twitter.com/Y3mj7qwrtI
9.03am BST
This screengrab shows the scale of this summer's market rout:
8.48am BST
Like a schoolboy scribbling his homework on the bus, European traders are making a late attempt to improve their performance in the last quarter.
Shares are rallying across Europe, as investors wonder whether this quarter's huge selloff has been overdone.
Related: Sainsbury's says annual profit to beat forecasts
Tasting Different...? UK supermarket optimistic on profit! What rally,biggest since 2007 for @sainsburys pic.twitter.com/E4WB4b5Tn1
Our business remains operationally and financially robust - we have positive cash flow, good liquidity and absolutely no solvency issues.
8.37am BST
Wowsers. Bloomberg has calculated that this summer's stock market rout has destroyed 11 trillion US dollars of value.
They identify two key factors -- China's shock devaluation of the yuan in August, and the Federal Reserve's decision not to raise interest rates this month.
In the wake of the worldwide selloff in equities that began in August, global markets have been in a heightened state of sensitivity. Rarely does one see so many major event-driven selloffs in quick succession. Last week the VW emissions scandal prompted a major selloff in European markets, carmakers and related companies worldwide.
Then Hilary Clinton, who had been planning to announce some new healthcare policies, jumped on the egregious price increase in a toxoplasmosis drug by new internet hate-target Martin Shkreli to decry the price of drugs in the US. This prompted a major selloff in healthcare and biotechnology stocks.
8.26am BST
Bloomberg economist Maxime Sbaihi agrees that eurozone inflation could turn negative today, but doesn't expect the European Central bank to panic.
Ready for negative inflation? Euro-area HICP released this morning after very weak German/Spanish readings yesterday. #ECB to look through.
8.23am BST
Shares in supermarket chain J Sainsbury have surged by 11% after it told the City that it expects to beat profit forecasts this year.
Total sales across the company rose by 0.3%, suggesting the company is riding out the price war raging in the sector.
Sainsbury's CEO Mike Coupe says his staff take home about as much as Lidl and Morrisons staff will once they get the living wage.
Sainsbury's CEO Mike Coupe says expects that over time his staff will be paid more than the full living wage.
8.20am BST
China's stock market has endured a torrid quarter.
The Shanghai composite index just closed, having fallen 26% since the start of July after fears over the country's slowdown sparked panic selling during the summer.
8.10am BST
The north-south divide in house prices increased in the summer, as growth in London moved back into double figures, the UK's biggest building society reports.
7.53am BST
After a summer of wild swings, world stock markets are about to post their worst quarterly performance since the dark days of the eurozone crisis.
Fears over the global economy have hit equity values across the globe. Many of the main indices are facing double-digit losses since the start of July.
"Global equities are closing in on their worst quarter since 2011, with a number of factors fueling fears in an already jittery market, including weak global growth, driven by deceleration in emerging markets, particularly China,"
Worst Q since 2011 pic.twitter.com/hLokctK0V8
7.40am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Our European opening calls: $FTSE 5976 up 67 $DAX 9560 up 110 $CAC 4394 up 50 $IBEX 9486 up 92 $MIB 20918 up 192
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