IMF warns of 'Triad' of risks facing global economy - as it happened

Emerging market vulnerabilities, weak liquidity levels and the legacies of the last crisis could all threaten stability, says International Monetary Fund

• Latest: IMF warns of triad of risk
• UK economy probably grew 0.5% last quarter
• German industrial output down 1.2%
• Spanish output also drops in August
• Tesco profits halve

5.40pm BST

It's a busy day for central banks on Thursday, with the latest Bank of England interest rate decision as well as the minutes.

Meanwhile the Federal Reserve will release the minutes from its September meeting, when it held rates when it was widely expected to sanction a rise.

4.52pm BST

Global stock markets have been supported in recent days by the hope that the Federal Reserve will not raise US interest rates this year, in the wake of Friday's weak US jobs data. Other central banks are also expected to continue to support the global economy with further stimulus measures.

And a recent surge in the oil price, with output predicted to fall and demand stabilising, has also helped, as has the fact that China's stock market - so volatile - has been closed for a holiday which ends tomorrow.

4.39pm BST

More on oil, and the effect of a falling crude price on exporters, from the International Monetary Fund. Larry Elliott reports:

The full extent of the impact of slumping crude prices on Saudi Arabia's public finances has been highlighted by the International Monetary Fund in a new report telling oil exporters to be braced for a prolonged period of disruption to their budgets.

The fund's half-yearly fiscal monitor report shows that in the past three years a hefty budget surplus in Saudi Arabia has been turned into a deficit of more than 20% of GDP - double the shortfalls seen in the UK and the US during the worst of the global slump of 2008-09.

Related: Oil price slump turns Saudi surplus into huge deficit, IMF report shows

4.19pm BST

The recent rise in oil prices may not last, according to Joshua Mahony, market analyst at IG. He said:

While the recent rise in the price of oil has led mining firms higher, it is clear that oil price volatility could easily see everything crash lower once more like a house of cards.

This afternoon saw oil inventories rise by 3.1m barrels, taking some of the wind out the sails of this recent rally. The continued build-up of US crude inventories undermines the idea that US producers are finally feeling the pinch and cutting back on production. Oil is and will remain in strong supply going forward.

3.54pm BST

Oil prices have edged down from their highest levels of the day as US crude stocks rose by more than expected last week, up by 3.1m barrels compared to forecasts of a 2.3m increase.

Brent crude is currently up 0.96% at $52.42 a barrel after earlier climbing as high as $53.15. The price has been supported in recent days by signs that Russia and Opec were willing to discuss the oversupply situation and the US energy department said it expected production to fall next year.

US COMMERCIAL CRUDE STOCKS rose +3.1 million bbl last week, up +10.2 million bbl in last 6 weeks: pic.twitter.com/ChUZPDlnjP

US GASOLINE STOCKS stand at 24.76 days of current consumption, up from 23.99 days this time in 2014 pic.twitter.com/ijH5BbRqBJ

3.22pm BST

Here's Heather Stewart's analysis of the IMF financial stability report:

The next financial crisis is coming, it's a just a matter of time - and we haven't finished fixing the flaws in the global system that were so brutally exposed by the last one.

That is the message from the International Monetary Fund's latest Global Financial Stability report, which will make sobering reading for the finance ministers and central bankers gathered in Lima, Peru, for its annual meeting.

Related: Next financial crash is coming - and before we've fixed flaws from last one

3.14pm BST

US markets are joining in the global rally, helped by energy companies as crude continued to rise on talk of falls in output. The prospect of the US Federal Reserve raising interests has grown less likely, which is also giving some support to shares.

The Dow Jones Industrial Average is currently up 145 points or 0.8% while the S&P 500 is around 0.7% higher.

3.13pm BST

Risks to financial stability are pointing firmly to the downside, says the IMF (ie, there's more chance of a nasty ending than a nice one).

In its new report, it warns:

The possibility of a global asset market disruption, whereby market risk premiums would decompress in a disorderly way and spread financial contagion, remains heightened.

Potential near-term adverse shocks in the presence of system vulnerabilities could prematurely halt the rise in U.S. interest rates, degrade nancial stability, and stall the economic recovery.

Shocks could originate in advanced economies-possibly owing to greater spillovers from Greece to the euro area and international markets-or emerging markets, for example, from greater-than-expected spillovers from China.

3.01pm BST

The International Monetary Fund has warned that that the global economy faces a 'triad of risks' which could trigger a new phase of the crisis.

Its new Global Financial Stability Report, the IMF identifies 'crisis legacies' in advanced economies, vulnerabilities in emerging market economies, and systemic market liquidity concerns.

If these challenges are mishandled, they could materialize as significant risks to financial stability.

As such, the global financial system faces an unprecedented adjustment as risk premiums "normalize" from low levels alongside rising policy rates, amid a modest global cyclical recovery.

The challenge will be for abnormal market conditions to adjust smoothly to the new environment.

However, there are risks from a rapid decompression, particularly given what appear to be more brittle market structures and market fragilities concentrated in credit intermediation channels, which could come to the fore as financial conditions normalize.

3.00pm BST

UK economic growth slowed in the third quarter compared to the previous three months, according to the think tank The National Institute of Economic and Social Research.

NIESR's latest monthly estimate of GDP suggests that output grew by 0.5% in the three months to the end of September after growth of 0.5% in the three months ending in August.

This slight softening in the third quarter is expected to be temporary. It is consistent with our latest forecast for the year as a whole.

Economic growth remains reasonable and, although we do not expect the Bank of England's Monetary Policy Committee to vote to raise rates at its October meeting [on Thursday], we continue to expect the first rise in Bank Rate in the first half of 2016.

2.28pm BST

Heads-up. In 30 minutes the International Monetary Fund will issue its latest Global Financial Stability Report, outlining its latest concerns over the world economy.

2.19pm BST

The pick-up in commodity prices today hasn't prevented Glencore from laying off 800 staff in South Africa.

1.50pm BST

You have have heard conspiracy theories that our central banks don't actually own all the gold they claim to.

Well, worry not! At least if you're in Germany, where the Bundesbank has now published a list of every single gold bars, individually numbered.

Bundesbank to doubters: Here Is our gold. Every. Single. Bit of it. http://t.co/ugupEHhxiY Publishes 2,302 page long list of gold holdings.

Perhaps the Bundesbank has learned a lesson here and realized that if it had just complied with the wishes of the Federal Court of Auditors back in 2012 it could have avoided this mess.

Or perhaps it has just become tired of people asking and decided to give the doubters enough data to keep them busy for a very, very long time.

This is going to make some riveting weekend reading. http://t.co/ueBE55r0HX pic.twitter.com/YYU4gqxEjE

1.37pm BST

AB InBev will have to dig rather deeper into its pockets if it wants to sate its thirst for SABMiller (an experience many familiar to many in the City, I suspect).

Ha...course no such transparency in the boozy M&A dance! But ppl familiar told Bloomberg 45 fairer value...@Brenda_Kelly @SABMiller

1.14pm BST

It's official - SABMiller has resoundingly rejected AB InBev's 68bn takeover proposal.

After mulling it for a few hours, the SAB board have concluded that the 42.15 per share offer, made this morning, undervalues them.

The Board of SABMiller has now met formally to consider the new proposal announced by AB InBev today (the "42.15 Proposal" as defined in the announcement by SABMiller earlier today).

The Board, excluding the directors nominated by Altria Group Inc., has unanimously rejected the 42.15 Proposal as it still very substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects.

#SABMiller rejects #InBev offer for 42.15 per share.

12.41pm BST

After the turmoil in late August and September, the stock markets have quietly posted some solid gains in October.

Bloomberg's Mark Barton is tweeting some key charts:

European #mining companies rise for a 7th day - the best run since December 2013... pic.twitter.com/hnuKHI70Vr

#EmergingMarket stocks rise for a 6th day - longest stretch since April pic.twitter.com/6eui7YmZKA

The 7-day 18% rally in European #oil stocks is the biggest since 2008... pic.twitter.com/u5wwhegMLJ

12.00pm BST

Europe's stock markets are refusing to be downhearted by the German and Spanish factory slowdown.

The FTSE 100 has hit its highest level in seven weeks, with four mining companies leading the way. Anglo American is leading the risers, up 10%.

We recommend investors raise their exposure to emerging markets/commodities given the combination of very low sentiment, attractive relative valuations and a likely inflection in macro sentiment...

We upgrade mining/materials from underweight to overweight and reiterate our overweight position in energy.

Related: FTSE heads for seven week high as miners and oil rise, but Diageo dips on disposals

10.58am BST

UK companies that actually make things are lagging behind those who dig stuff out of the ground:

British industry is doing okay - but manufacturers continue to struggle - a global phenomenon pic.twitter.com/CrjTOYPAa4

10.32am BST

Encouraging news from Greece. The European Central Bank has cut the amount of emergency support it is providing to the country's banks by a1bn, to a87.9bn.

That's at the request of the Bank of Greece.

The reduction of a1.0bn in the ceiling reflects an improvement of the liquidity situation of Greek banks, amid a reduction of uncertainty and the stabilization of private sector deposits flows.

10.09am BST

Britain's factories posted a 1.0% rise in industrial output in August, beating Germany and Spain.

Manufacturing output increased by 0.5% in August - unlike to be enough to halt a 3rd consecutive quarter of contraction however #ukmfg

August's rebound in industrial production means that the sector may have managed to eke out marginal growth in the third quarter rather than contracting as had previously looked likely.

Even so, industrial production was still only up 0.1% in the three months to August compared to the three months to May.

9.44am BST

Brewing giant SABMiller has just issued a lukewarm, borderline chilly, response to AB InBev's new 68bn takeover offer.

In a statement to the City, SAB points out that the new proposal, at 42.15 per share, is only 15p higher than the previous proposal which was rejected on Monday.

"SABMiller is the crown jewel of the global brewing industry, uniquely positioned to continue to generate decades of standalone future volume and value growth for all SABMiller shareholders from highly attractive markets.

AB InBev needs SABMiller but has made opportunistic and highly conditional proposals, elements of which have been deliberately designed to be unattractive to many of our shareholders. AB InBev is very substantially undervaluing SABMiller."

SABMiller signals rejection of new approach http://t.co/TsNrsxW5cx

9.41am BST

A UK lawyer representing around 1,200 Volkswagen owners in the UK is extremely unimpressed by Matthias Mi1/4ller's plan to start vehicle recalls in January:

Ms Michalowska-Howells of Leigh Day says drivers need more answers:

"The way in which this is being handled by Volkswagen is staggering. Rather than responding to very serious concerns from their customers, they are providing the minimal information.

"The latest lamentable statement, given today to a German newspaper, does reveal that some customers will need serious interventions to parts of their vehicle. Which cars and what interventions?

9.31am BST

Volkswagen shares have jumped by 5% this morning after the German carmaker coughed up its plan to fix the emissions scandal.

"If everything goes as planned, we can start the recall in January...All the cars should be in order by the end of 2016."

Related: VW's CEO: all cars affected by rigging to be repaired by end of 2016

Volkswagen's stock chart is starting to look like BP's after oil spill http://t.co/IK62g3vi52 pic.twitter.com/nWCCjUkqQV

Related: Volkswagen Australia confirms 77,000 cars with emissions-rigging software

9.01am BST

This chart shows that a) monthly German industrial orders are volatile, b) August's 1.2% decline was the biggest in a year:

More bleak numbers. German industry output unexpectedly falls even ahed of VW crisis. http://t.co/m5q7i61p5K pic.twitter.com/0sv2zn9db0

8.46am BST

European stock markets are all gaining ground this morning, despite the disappointing factory output figures from Spain and Germany.

Speculation that the US Federal Reserve won't raise interest rates this year is driving up the value of commodities. Weak data probably means looser monetary policy, for even longer.

Last couple of days have seen FTSE100 back above 6300 for first time since August's Black Monday. pic.twitter.com/tmdCfJp1An

8.38am BST

Another blow to the eurozone. Output at Spain's factories shrank by 1.4% month-on-month in August.

That's rather worse than the 0.4% decline which economists had expected, and even sharper than the reversal in Germany.

Spanish Industrial Production Data (Aug): M/M -1.4% v -0.4% exp, prev +0.6% rev +0.7% SA Y/Y +2.7% v +4.7% exp, prev +5.2%

8.23am BST

There's a frisson of deal mania in the City this morning, after brewing giant Anheuser-Busch InBev hiked its proposed takeover offer for British brewer SABMiller to 68bn.

Related: AB InBev raises takeover offer for SABMiller to $104bn

8.13am BST

Shares in Tesco have fallen by more than 3% after the supermarket chain told shareholders that operating profits more than halved in the last six months, to 354m.

Tesco has had a traumatic year, hit by an accounting scandal and the fierce grocery price war. It has been losing sales to discount retailers such as Aldi and Lidl and last year posted a record 6.4bn loss, one of the biggest in British corporate history.

The company's chief executive, Dave Lewis, who joined from Unilever just over a year ago, has embarked on a turnaround plan for the group, cutting prices and improving customer services. But some City analysts say progress has been too slow.

Related: Tesco profits tumble by more than half

8.08am BST

Germany's economy ministry is urging us not to panic, and claiming that the drop in factory output is partly due to the summer holidays.

Carsten Brzeski, economist at ING, agrees that's a factor -- but says the figures are still disappointing.

Yesterday's drop in new orders already signalled a note of caution. The August drop marked the first decline for two consecutive months since the beginning of the year. A clear sign for caution.

Over the last couple of months, the industrial safety net of low inventories and filled order books has become thinner.

German industrial production disappoints. Impact of Chinese slowdown or simply too much vacation? http://t.co/gSJWWSofRm

8.02am BST

The German economy doesn't need any more bad news at present, given the VW emissions scandal:

Warning lights are flashing RED on entire Germany economy, not just on the dashboards of Volkswagen. MINUS 1.2% https://t.co/ULcKANOLoA

8.00am BST

Christian Lips, an economist at NordLB in Hanover, says today's report shows Germany's industry is now lagging behind the consumer sector.

He told Bloomberg:

"A certain weakness in the [German] manufacturing sector cannot be ignored, even though it stands in stark contrast to strong private consumption."

7.52am BST

Germany's powerhouse manufacturing sector has suffered a poor August, in another signal that the global economy is feeling a chill.

Figures just released show that industrial output across Germany shrank by 1.2% in August, much worse than the +0.2% which economists had expected.

German Industrial Production for Aug follows in footsteps of yesterday's awful Factory Orders

German IP down 1.2% vs forecast for 0.2% increase. After factory orders, that's second disappointment this week.

7.46am BST

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

There's a subdued feeling in the markets this morning, after the International Monetary Fund warned that the global economy is on the brink of stagnation

Related: IMF warns of stagnation threat to G7 economies

#IMF cuts its global forecast to 3.1% this year. Now pretty similar to us. But key thing is heightened EM risks as #US tightening nears