FTSE falls sharply amid new Brexit warnings - as it happened

• European markets slump on Brexit fears, FTSE down 1.86%
• US consumer confidence dips but not as much as expected
• Germany on Brexit: it's all or nothing for UK
• German bund yields hit new record low
• UK construction output better-than-expected
• OECD: Britain has most to lose from Brexit

6.08pm BST

The number of US oil rigs rose for the second week in a row after the recent rise in the crude price to above $50, according to the regular Baker Hughes report.

The weekly count showed a total rise of 6 rigs to 414, as the increase in oil prices to an 11 month high encouraged drillers back to the wells.

BAKER HUGHES U.S. rig count rose +6 to 414 (2nd consecutive weekly increase) (oil +3 to 328, gas +3 to 85) pic.twitter.com/hmZIulRZwZ

5.59pm BST

Italian prime minister Matteo Renzi has said it would be a disaster for Britain if it voted to leave the EU, and would also hurt Europe and cause short term market instability.

[To be fair short term market instability is already with us]

5.44pm BST

Moving from fears of the UK leaving Europe to the England football team leaving the Euros, Zoe Wood has been looking at the winners and losers from the feast of football which begins this evening.

Read her report here:

Related: Business winners and losers from the Euro 2016 tournament

5.20pm BST

German 10y Bund yields closed at 0.02%, briefly dropped below 1bp. But see you on Monday for ZERO? pic.twitter.com/53NwgsjR6Q

5.04pm BST

It was a bad end to the week as investors took fright, with Brexit fears dominating the markets but a fall in oil prices and nervousness ahead of next week's US Federal Reserve meeting adding to the uncertainty.

Bond yields fell sharply and gold rose as investors took a safety first approach. In the UK, leading shares suffered their sharpest one day percentage fall since 11 February, while European markets also recorded major losses. Joshua Mahony, market analyst at IG, said:

Markets have come full circle this week, with the gains seen in the early part of the week giving way to substantial losses towards the end. It is particularly notable that whilst European indices have seen substantial losses, the US markets are have managed to claw back some early losses, highlighting proximity of the link between todays selling and the fear of a Brexit.

4.04pm BST

Worries about the global economy could be one factor pushing bond yields lower but it may not be the real story, says Andrew Kenningham of Capital Economics:

One possible explanation for the latest decline in global bond yields is that concerns about global growth have surfaced again. Certainly, some of the recent data have been disappointing. US non-farm payrolls for May were the weakest since 2010 and the ISM non-manufacturing PMI fell to its lowest level since early 2014...

However, in our view these worries about the global economy look over-stated. Most importantly, we suspect that abrupt slowdown in US payrolls growth is not the start of a new recession...

3.43pm BST

The pound hit a six week low of $1.4315, down 1% on the day, before recovering slightly to $1.4332 as Brexit worries persist.

3.15pm BST

The US consumer confidence figures come ahead of next week's Federal Reserve meeting but are unlikely to prompt a rate rise, says James Knightly at ING Bank:

[The confidence report] gives us some confidence in the view that last week's payrolls disappointment is not the start of a new trend seeing as confidence remains close to cycle highs, suggesting no distress about the state of the jobs market. Moreover, with the consumer expectations component looking healthy at 83.2, it suggests consumer spending should perform well in the coming months. With job openings at cycle highs, businesses are still recruiting so we would expect a decent rebound in the June jobs report.

However, the Fed will probably want to see at least two decent jobs figures before pulling the trigger on higher rates. This means we continue to favour the September Federal Open Market Committee meeting for the next rate rise.

3.11pm BST

UnivMich sentiment remains a picture of contrasts - people are feeling very good about their personal finances, but are wary on the macro

3.08pm BST

The consumer confidence survey's chief economist Richard Curtin said:

Consumers were a bit less optimistic in early June due to increased concerns about future economic prospects. The recent data magnified the growing gap between the most favorable assessments of Current Economic Conditions since July 2005, and renewed downward drift of the Expectations Index, which fell by a rather modest 8.6% from the January 2015 peak.

The strength recorded in early June was in personal finances, and the weaknesses were in expectations for continued growth in the national economy.

3.01pm BST

In the US, consumer confidence slipped back in the preliminary June reading, but not as much as expected.

The University of Michigan consumer sentiment index fell from 94.7 in May to 94.3, but this was better than the forecast figure of 94.

2.51pm BST

With stock markets under pressure amid a cocktail of concerns - including Brexit, falling oil prices, next week's Federal Reserve meeting on US interest rates - gold is one of the havens being sought by investors.

At the moment the metal is up around $5 an ounce at $1274. And here's how it has been tracking the uncertainty surrounding the Brexit debate:

#gold price appears to be tracking odds of #Brexit. We expect jump to at least $1,400 if UK votes to leave EU. pic.twitter.com/oDfYh59ZQp

2.44pm BST

Here's the state of bond yields, many in negative territory:

German 10-yr hits new historic low of 0.018%, Japan 10-yr at new historic lows (via @CNBC)

Don't forget:
Belgian 3-Yr -0.47%
Danish 2-Yr -0.48%
French 3-Yr -0.45%
Swedish 2-Yr -0.56%
Swiss 3-Yr -0.95%
Etc... https://t.co/KJ9lzy5nfp

2.35pm BST

Wall Street has opened lower:

2.31pm BST

Holger Schmieding, chief economist at Berenberg, has written a note on the likelihood of a domino effect across Europe, should Britain vote to leave the EU on 23 June.

He describes the possibility of a domino effect as "the main risk to watch for global markets and the global economy".

First, Italy matters because of its size (the fourth-largest in the EU) and its debt (133% of GDP). Second, since the demise of Silvio Berlusconi, Italy lacks a strong centre-right that could take over from Matteo Renzi's centre-left.

Third, if Renzi's government were to fall, unlikely but not impossible if he loses the referendum on constitutional reform this October, parties with more than 50% support in current opinion polls may campaign in hypothetical early elections with a promise to hold a referendum on euro membership.

2.11pm BST

US markets are expected to open lower:

US Opening Calls:#DOW 17885 -0.55%#SPX 2102 -0.63%#NASDAQ 4479 -0.76%#IGOpeningCall

1.34pm BST

Earlier Russia's central bank cut interest rates for the first time in nearly a year, citing an imminent economic recovery and more stable inflation.

After reducing its main lending rate by 50 basis points to 10.5%, Russia's central bank governor Elvira Nabiullina said there was unlikely to be any direct influence on the country's economy in the event of the UK voting to leave the EU, according to Reuters. But there could be indirect risks through reaction in the currency markets, she told a news conference.

1.13pm BST

If things stay as they are the FTSE 100's fall - now 1.86% - will be the biggest daily decline in percentage terms since the middle of February. With US futures suggesting a 95 point fall on the Dow Jones Industrial Average when Wall Street opens, the chances of a big recovery are not huge.

1.06pm BST

The FTSE 100 is now down 114 points or 1.8% at 6,118.

Spreadex's Connor Campbell gives this update on European markets:

Things got far, far worse in Europe, an alarming drop pushing the region's indices to a series of 2 and a half week lows.

With Brent Crude dipping below $51.50 per barrel, and the commodity sector rapidly losing the gains seen at the start of the week, the FTSE plunged over 100 points this Friday.

The eurozone indices bested the FTSE in the poor performance stakes this morning, the DAX and CAC dropping a whopping 2.1% and 1.8% respectively. Like the UK index that leaves both at their worst price since May 24^th, fears of a Brexit taking hold of the eurozone indices in a way that hasn't previously been seen.

12.48pm BST

Rewinding to slightly earlier in the day, the OECD's secretary general Angel Gurria gave an impassioned speech when asked about Brexit by a journalist.

The message is not permeating easily because there is a lot of emotion and frankly there is a lot of very misleading messaging that is going on.

I give you one example. It is often mentioned by the people who are promoting Brexit that 'there is stifling regulation of the UK economy and we will now be able to deregulate'.

The people promoting Brexit are speaking emotionally and they fail to provide any evidence to the contrary.

This is an intergenerational decision that has to be taken. I say that with the authority of being the father of a British citizen, married to a British citizen, and with two British children.

I would like them to have a better future. And I would like them to have a European future. And not in an isolated society, an isolated economy.

It is a cacophony of voices and in many cases the voices of those who are promoting their own political [ambitions] even if it is at the expense of future generations.

It is our duty and obligation to continue with the message, mostly to the British people. It's the British people who would suffer this drop in wellbeing and revenue. The Europeans are going to recover pretty fast, but the UK is going to take a much greater hit.

12.05pm BST

Wolfgang Schiuble is not the only one warning Brexit could prompt other countries to leave the EU.

Billionaire George Soros warned on Thursday it could lead to a collapse of the EU, and ratings agency Fitch said last week:

If the UK were to thrive outside of the EU, it might encourage other countries to follow suit.

Germany's Schaeuble latest to warn on Brexit domino effect in EU - echoes Soros and Fitch https://t.co/7DeF1493Os pic.twitter.com/BDwdrhhYI1

11.43am BST

It's not all terrible from Schiuble though, he would take us back, eventually:

At some point, the British will realise they have taken the wrong decision. And then we will accept them back one day, if that's what they want.

11.36am BST

Schiuble has also warned Brexit could lead to other countries leaving the EU, Reuters is reporting.

You can't rule it out. How would the Netherlands, which has traditionally been very closely allied with Britain, react, for example?

If need be, Europe would work without Britain.

Even in the event that only a small majority of the British voters reject a withdrawal, we would have to see it as a wake-up call and a warning not to continue with business as usual.

Either way, we have to take a serious look at reducing bureaucracy in Europe.

11.15am BST

Wolfgang Schiuble, Germany's combative and influential finance minister has waded into the Brexit debate.

Germany's finance minister, Wolfgang Schiuble, has slammed the door on Britain retaining access to the single market if it votes to the leave the European Union.

In an interview in a Brexit-themed issue of German weekly Der Spiegel, the influential veteran politician ruled out the possibility of the UK following a Swiss or Norwegian model where it could enjoy the benefits of the single market without being an EU member.

10.33am BST

Shares in all FTSE 100 companies are lower.

The top performers are down...

10.24am BST

Equity losses are gathering pace. Major European markets are down more than 1%.

The FTSE 100 is down 1.5% or 96 points at 6,136.

10.18am BST

The OECD says the European economy is slowly improving, but new challenges are emerging, including the prospect of Brexit.

European #economy slowly recovering but legacies of crisis remain & new challenges emerging https://t.co/Wf1KATRl5r pic.twitter.com/Jhf65aYSIv

10.15am BST

Gurria turns to the risk of Brexit:

It would hurt British growth, FDI inflows, trade. GDP could be 3% lower than if you did not have Brexit, if you go for remain.

We are strongly saying remain. This is best for the UK, the EU and the world. The last thing we need is uncertainty, we have enough of that already.

10.10am BST

The OECD's secretary general, Angel Gurria, says tensions in European financial markets have receded.

Why? Gurria lists the reasons.

The key has been better European policies. New rules. Monetary policy from the ECB has obviously been supportive.

It looks like we are moving to a better fiscal position without having to do much heavy lifting. The building blocks to banking union are underway.

10.05am BST

The OECD press conference on Europe is starting. Watch live here.

10.01am BST

The European Union must drop barriers to immigration to boost growth, according to the Organisation of Economic Cooperation and Development, in clear opposition to arguments put forward by the leave camp in the EU referendum that the UK would prosper despite restrictions on migrant workers.

The Paris-based thinktank, which is funded by the world's richest nations, said the EU needed to encourage workers to move to where they can find a job by forcing countries to recognise professional qualifications and allow workers to transfer their pensions.

9.47am BST

Asian markets closing prices:

APAC Closing Prices:#ASX 5312.59 -0.92%#NIKKEI 16601.36 -0.40%#HSI 21042.64 -1.20%#HSHARES 8831.97 -2.17%#CSI300 3163.98 -0.41%

9.42am BST

Construction output jumped 2.5% in April, beating expectations of a 1.7% rise.

It was the largest monthly increase since January 2014.

9.25am BST

Not everyone thinks piling into bonds at any cost is a good idea. Janus Capital's Bill Gross is one of them.

Gross: Global yields lowest in 500 years of recorded history. $10 trillion of neg. rate bonds. This is a supernova that will explode one day

9.03am BST

Benchmark 10-year German bund yields have hit a fresh record low, as investors rush to the relative safety of bonds versus equities.

The low was 0.0021%, meaning it is getting cheaper and cheaper for the German government to borrow money.

10y German Bund yields hit fresh life-time low at 0.023% as growth concerns revive and long-dated Bunds are scarce. pic.twitter.com/AzcGaEpNQo

8.37am BST

The flight from equities continues this morning, with European markets down in early trading.

As part of the same story, German bund yields have hit fresh record lows this morning , edging closer to negative territory (more on this soon).

Europe's second half of the week slump continued to gather pace this Friday, the session starting with another sharp slide.

With nothing on offer the FTSE had little choice but to focus on Brent Crude's retreat (the black stuff back down to $51.50 per barrel) and the increasing uncertainty surrounding the EU referendum at the end of the month (the pound dropping another 0.4% against the dollar).

8.21am BST

German annual inflation has been confirmed at zero in May, unchanged from earlier estimates according to the Federal Statistics Office. (This is the harmonised rate, to compare with other European countries.)

Also coming up today...

7.57am BST

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

Gold is in focus, nearing a three-week high and on track for a second weekly rise as investors seek save have assets in an uncertain world.

A move into negative territory for German bunds in the coming days would mean that investors would be paying to lend money to the German government all the way out to ten years, in the same way they currently are for Japan now.

Who would have thought that even possible even a year ago, investors paying governments to own their debt?