Markets climb despite UK, eurozone and US service sectors slowing -as it happened

Graeme Wearden (until 2pm BST) and Nick Fletcher (

from on 2015-10-05 17:10 (#PFQ3)

All the latest economic and financial news, including disappointing surveys of Europe's dominant service sector and protests at Air France

6.10pm BST

On Spain Dijsselbloem said it was up to the Spanish government to act on the opinion it had been given about the country's budget, and to decide whether additional measures needed to be taken. The Eurogroup would take stock of the situation at an additional meeting about draft budgetary plans on 23 November.

Answers question about discussing Spain's Draft Budgetary Plan #Eurogroup https://t.co/STF9jZABmQ

6.06pm BST

Dijsselbloem sounded positive when asked whether the Greek plans could be agreed in such a short space of time:

Challenging time for #Greece but since agreement this summer implementation efforts of government are strong #Eurogroup

Greece sees 2015 primary deficit at 0.24% of GDP, primary surplus of 0.52% in 2016, in line with MoU targets (draft budget) #Greece #economy

Greek draft budget proposal submitted: Economy to contract 2.3% this year, 1.3% in 2016

5.49pm BST

The Eurogroup has welcomed Greece's commitment to its bailout programme, said the group's president Jeroen Dijsselbloem after the day's meeting ended.

He say the most important thing was to conclude the first review as soon as possible. The first set of milestones had been agreed, and would have to be completed by the middle of October to unlock the next a2bn payment of the remaining a3bn. The next set of milestones will have to be worked on "with great urgency" and agreed by the end of October.

.@pierremoscovici says Spain to miss its headline fiscal targets in 2015 + 2016, Commission to issue warning to Spain tomorrow

A bit of a surprise: @pierremoscovici gives bad early opinion of #Spain budget...just ahead of elex. Says govt needs to come back after elex

When he arrived at #eurogroup, #DeGuindos said @EU_Commission wouldn't ask for more cuts. @pierremoscovici just did. https://t.co/uSH54lBIiQ

5.28pm BST

Hopes that central banks will continue to support the global economy have sent stock markets soaring. The impetus seems to be the poor US jobs figures from Friday, which has convinced investors - for the moment - that the US Federal Reserve is now unlikely to raise interest rates this year. Weaker than expected US service sector data earlier has just added fuel to this particular fire.

The optimism was helped by a revival in commodity prices, with vague talk of more Chinese central bank stimulus on the way, which has supported the mining sector. David Madden, market analyst at IG, said:

Commodity stocks are back in fashion as rumours of a Chinese stimulus package are doing the rounds. The mining industry has been battered and bruised recently, but the possibility of an easing policy from China has seen the buyers flood back in again. The last few times China tried to encourage economic activity by announcing a stimulus scheme it has backfired, and sent commodity related stocks crashing, but now there is the feeling that something drastic is needed.

5.12pm BST

The Eurogroup discussion on Greece was apparently fairly brief:

Just 20' lasted the #Greek discussion during #Eurogroup.Goal is to finish as soon as possible 2 sets of milestones,1st review and bak recap

4.03pm BST

Here's more about what's expected from Alexis Tsipras when he speaks to parliament later. Helena Smith reports:

The leftist leader will open a three-day debate on his new government's policy plans arguing the corrosive effects of austerity will be softened by the implementation of a "parallel program" of social benefits. Tsipras, who was given a second chance when Greeks elected to renew his term in office with a second electoral victory in September, will be alone in addressing the 300-seat House tonight.

Acutely aware of the damaging effect of successive rounds of punitive belt-tightening measures, the 41-year-old premier will emphazise the policies his two-party coalition will take to ameliorate the blow of yet more measures in the coming months. Tsipras has frequently said that while he has been forced to compromise with creditors keeping the debt-stricken country afloat, he has not "been compromised.

3.56pm BST

As the Eurogroup meets in Luxembourg, Greece's creditors expressed hope the country could deliver on the pledges it made in return for a further bailout.

Greek prime minister Alexis Tsipras is submitting the country's budget to parliament this week, outlining the reforms needed under the country's three year a86bn bailout, and, as Associated Press reports, eurozone finance ministers arriving in Luxembourg seemed relatively upbeat about the prospects for agreement:

Pierre Moscovici, the European Commission's top economy official, said he was encouraged by Tsipras' recent pledges that his government will meet its promises.

"I am confident there is a common will to avoid a new drama, a new tragedy with Greece, but at the same time we must also be vigilant," Moscovici said arriving for the meeting in Luxembourg. "There is a positive dynamic in relations between the eurozone and Greece."

3.21pm BST

BP will pay $4.9bn to settle claims from US states relating to the 2010 Gulf of Mexico oil spill, according to court papers seen by Reuters. As a condition of the settlement, the US states involved have agreed not to sue BP. The company said in July it would pay up to $18.7bn in state and federal penalties, and more details are due later.

3.12pm BST

Dennis de Jong, managing director at broker UFX.com said:

With inconclusive economic data in recent weeks, the Fed is now split on the timing of an interest rate rise. That situation is unlikely to change in response to today's non-manufacturing figures, which aren't strong enough to sway Janet Yellen and Co towards a clear decision.

A decline on last month puts a dampener on what is actually quite a robust set of numbers. It's not all doom and gloom, however, as Yellen's reluctance to act may be seen as a positive move elsewhere.

3.04pm BST

Confirmation that the US services sector saw slowing growth in September comes from the Institute for Supply Management.

The ISM services index fell to 56.9 from 59 in August, and lower than analysts' expectations of a reading of 57.5p. Both new orders and business activity slowed.

US Data Watch: September ISM Non-Manufacturing Employment Index At 58.3 Vs 56 (MoM)

The Employment component of ISM Services PMI actually rose 2+ points 58.3 last month - did NFP overstate labor market weakness? ^MW

2.53pm BST

And shortly we will get the ISM indices...

2.53pm BST

America's service sector is growing by less than expected, according to the first of two rival surveys.

Markit's final purchasing managers index for the sector came in at 55.1 for September, down from an early reading of 55.6, which was also what analysts had been expecting for the final figure. That compares to 56.1 in August.

The US economic growth slowed in the third quarter according the PMI surveys, down to around 2.2%. But this largely represents a payback after growth rebounded in the second quarter, suggesting that the economy is settling down to a moderate rate of growth in line with its long term average.

Hiring also remains relatively robust, albeit down from earlier in the year, again suggesting that the economy has shifted down a gear but remains in good health.

2.42pm BST

In tandem with other global markets, Wall Street is moving ahead strongly.

The Dow Jones Industrial Average is up 164 points or 12%, while the S&P 500 has opened 0.5% higher.

2.23pm BST

China can manage its economic slowdown but needs to communicate policy more effectively, says the International Monetary Fund.

Ahead of its annual meeting the IMF said China's exchange rate was in line with medium term fundamentals after the recent devaluations, Reuters reports.

2.10pm BST

Global corporations are avoiding tax to the tune of up to $240bn a year, according to a new report from the OECD, which has also announced reform measures to tackle the problem. Simon Bowers reports:

An unprecedented international collaboration on tax reform, led by the G20 nations and targeting many of the world's largest global corporations, will wipe out much of the tax avoidance industry, it was claimed today.

The two-year reform programme, under the auspices of the OECD, was prompted by a spate of revelations in recent years about the tax affairs of multinationals including Starbucks, Google and Amazon.

1.57pm BST

A quick recap:

Britain's recovery slowed last month, according to the latest survey of its dominant service sector.

And we're off: @J_Dijsselbloem arrives for #Luxembourg #eurogroup meeting. Looks greyer than last time! pic.twitter.com/qmaA63qho4

1.38pm BST

European commissioner Pierre Moscovici tweets from Brussels:

Arrival at #Eurogroup meeting on #Greece: common will to avoid new drama. @EU_Commission is here to help. Implementation needed. @EEAthina

1.29pm BST

The Trans-Pacific Partnership deal is "a huge strategic and political win for US President Barack Obama and Japan's Shinzo Abe," says the FT's Shawn Donnan.

He writes:

It represents the economic backbone of the Obama administration's strategic "pivot" to Asia and a response to the rise of the US's chief rival, China, and its growing regional and global influence.

It is also a key component of the "third arrow" of economic reforms that Mr Abe has been pursuing in Japan since taking office in 2012.

1.22pm BST

Over in Atlanta, a dozen Pacific Rim nations have reached the most sweeping trade liberalization pact in a generation.

After late hitches over drugs monopolies, and New Zealand's dairy market, the Trans-Pacific Partnership (TPP) has been hammered out. It is meant to lower trader barriers in the region, and set common standards in around 40% of the world economy.

The TPP aims to lower trade tariffs between the signatory nations and bring in wide-ranging new regulations for investment, agriculture, intellectual property, labour and the environment. This in turn could mean cheaper food, medicine and everyday household goods for millions of people. It will also help the 12 countries to counter China's rising economic influence in the region.

1.12pm BST

The Brussels press pack are assembling for today's meeting of finance ministers, where Greece's new bailout package will be discussed.

But it's not as exciting as the eurogroup meetings we enjoyed (or was it endured?) this summer, so there's more space outside:

U know its going to be a boring #Eurogroup by the amount of space at the doorstep pic.twitter.com/vghReLH4Cj

1.04pm BST

The Greek parliament is back in full force today with prime minister Alexis Tsipras outlining his newly elected government's policy programme as the draft 2015 budget is also submitted.

"He will present the prior actions lenders are demanding at the meeting,"

"These are the first package of measures we have agreed to apply [in exchange] for loans."

12.38pm BST

Air France-KLM has criticised those responsible for today's violence, and insisted that most staff were protesting peacefully before a group burst into its boardroom.

A spokesman said:

"This violence was carried out by particularly violent, isolated individuals, whereas the protest by striking personnel was taking place calmly up until then."

12.26pm BST

Associated Press has more details on the Air France protests this morning:

Union activists protesting proposed layoffs at Air France stormed the headquarters during a meeting, zeroing in on two managers who had their shirts torn from their bodies, scaled a fence and fled under police protection.

An Associated Press photographer saw about a hundred activists rush the building. The managers who fled included the head of human resources.

11.51am BST

Fortunately, Xavier Broseta and Pierre Plissonnier did manage to escape the demonstrators, sans chemises.

11.38am BST

Over in Paris, two Air France executives appear to have had their shirts ripped from their backs after the airline announced plans to cut up to 2,900 jobs.

According to local media reports, several hundred workers stormed the airline's headquarters this morning, after it announced the cutbacks.

Hundreds of @AirFranceFR employees storm management meeting. Head of HR emerges shirtless, accompanied by security. http://t.co/V955f97Mzp

11.17am BST

European stock markets aren't panicking at today's service sector slowdown.

Instead, they continue to rally -- catching up with Wall Street's late jump on Friday night.

Odds of a rate hike in October have fallen below 10%. http://t.co/KMKpyq4jJc via @richwesgoodman

UK and European markets were higher across the board on Monday, playing catch-up from the biggest turnaround on the Dow Jones Industrial Average in four years on Friday.

The French CAC was higher by over 2.5% supported by positive French service sector data. Missed expectations for Germany's service sector took the edge off gains on the DAX, which was still higher by over 1.5%.

10.31am BST

A new survey of Britain's top finance chiefs confirms that the UK economy may be weakening.

Our Katie Allen reports this morning:

China's downturn, the prospect of rising interest rates and uncertainty about the global economic outlook have knocked confidence among bosses of the UK's biggest companies, according to a survey.

Chief financial officers (CFOs) polled by the consultancy Deloitte reported a sharp rise in uncertainty facing their businesses and have scaled back their expectations for investment and hiring over the coming year.

10.14am BST

Economist Howard Archer, of IHS Global Insight, fears UK economic growth could stumble in the last quarter of 2015:

We have been expecting UK GDP growth to slow to 0.5% q/q in Q3 from 0.7% q/q in Q2 but now very real risk it may be no better than 0.4% q/q

10.12am BST

The slowdown across Britain's service sector is putting the recovery at risk, says David Noble CEO at the Chartered Institute of Procurement & Supply.

He blames the knock-on effect of China, which sparked global market panic in August after Beijing devalued the yuan.

The further softening of growth in the services sector must now be causing some concern for the sustainability of the recent recovery in the UK economy....

It appears that when China sneezes, the world catches a cold as some companies cited the region as a cause for worldwide concern.

10.01am BST

Some instant reaction to the slowdown in Britain's services sector:

Wheels coming off Osborne's recovery? Weakest rise in service sector activity in nearly two-and-a-half years in September

Weaaaaaaak UK services PMI. Slowest growth since April 2013. Slowdown coming?

Ouch! Markit services #PMI Weakest rise in activity in nearly two-and-a-half years in September #GBP

9.51am BST

Britain's service sector suffered a sharp slowdown last month, new data shows, raising fears that the economy may be faltering.

Data firm Markit reports that activity across the sector grew at its slowest rate since April 2013 in September. Its service PMI fell to 53.3, from August's 55.6 (where 50=stagnation).

"Weakness is spreading from the struggling manufacturing sector, hitting transport and other industrial-related services in particular.

There are also signs that consumers have become more cautious and are pulling back on their leisure spending, such as on restaurants and hotels."

9.34am BST

Growth across Europe's private sector is slowing, according to the latest healthcheck of the region's service sector.

Markit's Eurozone PMI, which measures activity at thousands of companies, dipped to a four-month low of 53.6 in September, down from 54.3 in August. That shows the sector kept growing, but at a slower rate.

"The final PMI reading came in slightly below the earlier flash estimate but still leaves a signal of the eurozone economy having expanded 0.4% in the third quarter.

"However, the failure of the economy to pick up speed over the summer will be a disappointment to the ECB, especially with job creation sliding to an eight-month low.

8.43am BST

Mining stocks are packing the top of the FTSE 100 leaderboard:

Consensus is building that the Federal Reserve won't now be in a position to hike interest rates before the end of the year. This gives emerging markets a little more breathing room and it's the mining stocks that are forging their way to the top of the table.

8.40am BST

Shares are rallying across Europe this morning, fuelled by hopes that central banks keep topping up the punchbowl for longer.

France's CAC index is the biggest riser, up nearly 2%, and Germany's DAX gaining 1.3%.

"Risk aversion weakened today as the weak U.S. employment data supported expectations that the Fed would put off the timing of rate hikes."

8.15am BST

Glencore's shares have rallied by 8% in early trading in London, fuelled by that takeover talk and speculation that it could sell its agricultural business.

They're up 7.8p at 108.6p, having briefly jumped 20% to 114.45p. That's quite a recovery, given they slumped to 66p last week.

...the Board confirms that it is not aware of any reasons for these price and volume movements or of any information which must be announced to avoid a false market in the Company's securities or of any inside information that needs to be disclosed...

8.04am BST

Seven long years after bailing out Lloyds Banking Group, the UK government is finally selling some of its remaining stake to the public.

The value of the bonus share incentive will be capped at 200 per investor. People applying for investments of less than 1,000 will be prioritised.

The sale of Lloyds shares to small investors at a discount is a subsidy from taxpayers to middle-class people with brokerage accounts.

7.55am BST

10 minutes until the FTSE100 opens - expected to start +110 points at 6240.

7.54am BST

Reports that Glencore is in talks to sell its entire agriculture business are helping to drive its shares higher.

That would provide fresh resources to tackle its $30bn debt mountain, and to handle a further drop in commodity prices.

7.50am BST

Something is going on at Glencore, the troubled commodity trading and mining company.

Shares in Glencore leapt by over 70% in Hong Kong overnight, and are currently up over 30%.

Glencore would listen to offers for a takeover of the entire company but its management does not believe there are any buyers willing to pay a fair value for the business in the current market.

Glencore says "unaware of reasons for share movements" pic.twitter.com/eVnkHXg1U5

7.43am BST

Big news breaking in the retail sector -- American Apparel, supplier of ethical clothing and god-awful adverts, has filed for bankruptcy protection.

The move follows a steady slide in sales, and ever-more disturbing antics by ex-chairman Dov Charney, who was forced out a year ago.

7.42am BST

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

A new week begins with investors digesting still last Friday's disappointing US jobs data.

#Japan's Nikkei ends up 1.6% at 18005.49 buoyed by #TPP talk progress, US easy policy. pic.twitter.com/GGNbAzlQxu

Market Update: Sensex 26614.54 +1.50%: Nifty 8061.75 +1.39% #CNBCTV18Market

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