Tension escalates as Greece threatens to seize German assets – as it happened

• Athens says it is ready to seek compensation for Nazi war crimes
• Germany: Greek talk of war reparations is distraction from crisis
• Euro falls to fresh 12-year low against the dollar
• Confusion over troika visit to Athens
• Mario Draghi says eurozone QE is already working
• Surprise fall in UK manufacturing output
• Weak China data raise slowdown fears

5.29pm GMT

That's all for today, folks. We'll be back tomorrow. Thanks for all your great comments.

5.27pm GMT

On Wall Street, stocks have recovered somewhat from recent losses. The Dow Jones industrial average is currently up more than 30 points at 17,696.17, a 0.2% gain, while the S&P 500 is also 0.2% ahead at 2,047.52.

Andrew Wilkinson, chief market analyst at Interactive Brokers Group in Connecticut told Reuters:

There's a growing acceptance that the Fed will raise interest rates possibly as soon as June, and people continue to reel in shock as to how far the ECB is likely to remain at zero.

In the meantime, on the back of a big fall, for stocks it looks like people are regrouping again today.

5.15pm GMT

Bank of England policymaker Martin Weale also indicated that he could vote for higher borrowing costs in coming months. One of the four independent members of the Bank's nine-strong monetary policy committee, he said that despite global worries about low inflation the decision about whether to raise interest rates was finely balanced.

Read our story in full here.

5.11pm GMT

The FTSE 100 stocks that are most exposed to the euro (i.e. get more than half their revenues from the eurozone) include Imperial Tobacco, 3i, Vodafone and Easyjet. In the other indices, Thomas Cook, Flybe, Hansteen and Capital & Regional all generate the bulk of their business in the eurozone.

5.02pm GMT

The IMF loan to Ukraine is (obviously) based on an economic reform programme supported by the fund. Here is Lagarde's statement in full.

The change in the IMF-supported program from Stand-By Arrangement to Extended Arrangement under the EFF, which is consistent with the more protracted nature of Ukraine's balance-of-payment needs, will provide more funding, more time, more flexibility, and better financing terms for Ukraine.

The Ukrainian authorities continue to demonstrate a strong commitment to reform. They have maintained fiscal discipline in very difficult conditions; allowed the exchange rate to adjust; and have increased retail end-user prices for gas. Many key measures are front-loaded under the new program-including further sizable energy tariff increases; bank restructuring; governance reforms of state-owned enterprises; and legal changes aimed at combating corruption and strengthening the rule of law.

4.56pm GMT

Breaking news: The IMF has signed off on a four-year loan programme for Ukraine worth $17.5bn. IMF chief Christine Lagarde said described it as ambitious, but added that there is a "reasonably strong prospect of success".

4.53pm GMT

European stock markets have closed.

4.46pm GMT

Here in the UK, Bank of England rate-setter Martin Weale sees the risk of a sharp fall in sterling because of the country's large balance of payments deficit.

Britain's current account deficit was equivalent to 6% of GDP in the third quarter of last year, matching the biggest deficit on record.

Certainly it seems to me that there is a risk of a sharp movement in the exchange rate. I would be inclined to say more of a risk of a sharp downward movement.

The economy always springs surprises, and what's been happening to sterling in the last few weeks has been one of those surprises.

4.28pm GMT

Greek wages edged up 0.3% in the fourth quarter of last year compared with a year earlier, according to the Hellenic Statistical Authority. Seasonally adjusted, the wage index grew 1.4%, after an 8.3% decline in the same quarter in 2013.

4.26pm GMT

The Greek stock market has ended the day 2.5% lower at 797.30 points, below the 800 point level for the first time in 18 sessions. Bank shares suffered some of the heaviest losses, including National Bank, Eurobank and Alpha Bank.

4.14pm GMT

Anti-German sentiment has not been confined to the Greek justice minister, writes Helena Smith. Senior officials in Athens have been railing against Berlin today.

Before Greece's justice minister Nikos Paraskevopoulos raised the prospect of seizing German assets to pay war reparations, Dimitris Stratoulis, the minister in charge of social security, was also railing against Berlin's hegemony of Europe.

"Germany's Europe has finished, [the Europe] where Germany forbids and all the other countries execute orders is over. In November when [Spain's anti-austerity party] Podemos is elected, things will be even worse for them.

We were elected so the Greek people could breathe.

4.13pm GMT

German chancellor Angela Merkel narrowly escaped a much bigger rebellion among her conservatives last month, many of whom would have opposed Greece's bailout extension had it not been for her finance minister Wolfgang Schiuble's powers of persuasion.

Germany's parliament overwhelmingly passed the extension on 27 February, even though a record number of conservatives voted against. (29 of the 32 parliamentarians who voted against came from Merkel's CDU and its Bavarian sister party CSU.)

3.20pm GMT

The pound has hit its lowest level against the dollar in 20 months, amid growing expectations that US interest rates will rise in coming months. Sterling fell almost 1% to $1.4929 at one stage.

The dollar, for its part, has gained more than 10% against a basket of six major currencies so far this year, led by its rise against the euro. This puts it on track for its best quarterly performance since 1992.

2.54pm GMT

Back on Greece, the Guardian's correspondent Helena Smith says the planned return of the troika is already causing ruptions within the governing Syriza party.

Energy minister Panaghiotis Lafazanis, who heads the far Left Platform in the governing Syriza party, told an international conference on energy security in Athens:

"Greece is a very small country to remain a dependent economic protectorate of the troika." The anti-austerity government would resist the demand to privatize companies in the energy sector, he insisted.

2.37pm GMT

A eurozone policymaker has rejected the idea that the central bank is helping to push the euro lower to gain competitive advantage in the region.

Ewald Nowotny, head of Austria's central bank and a member of the European Central Bank's governing council told an audience in Frankfurt:

The ECB, as a central bank, does not have [the] exchange rate as a policy. It's a side effect of other things.

Exchange rates ... are not a major dominant factor for the global economy. I think it would be wrong to assume that what is going on right now is a c currency war.

1.59pm GMT

US stock markets are up slightly in early trading following sharp falls on Tuesday.

1.22pm GMT

Reuters is reporting that doubts over Greece's future membership of the eurozone are straining its relationship with Cyprus.

Cyprus wants to reverse a perception that the two countries are inextricably linked, worried that it could be dragged down with Greece, should Athens' finances collapse and force the Greeks to abandon the euro.

The fate of Cyprus, a divided island on Europe's frontier with the Middle East, could prove an important test of the durability of the eurozone and the wider European Union in the face of political uncertainty in Greece.

12.34pm GMT

The German government has dismissed threats from the Greek government, which has claimed it is ready to seize German assets as compensation for Nazi war crimes.

Steffen Seibert, spokesman for German chancellor Angela Merkel said:

It is our firm belief that questions of reparations and compensation have been legally and politically resolved.

We should concentrate on current issues and, hopefully, what will be a good future.

12.15pm GMT

Greek shares are down 1% this morning with the main ATG index at 808.69.

Greece has yet to come up with a package of reforms that its creditors are happy with. A final tranche of funding under the existing bailout will only be released if agreement is reached on reforms.

Schaeuble brands Varoufakis 'foolishly naive' - VIDEO - http://t.co/Ya3PPa77jM pic.twitter.com/lOSe1tr8qC

11.41am GMT

Tensions between Greece and Germany have been raised a few notches, with reports from Athens that justice minister Nikos Paraskevopoulos is threatening to seize German assets to compensate Greek victims of Nazi war crimes.

This report from Greek daily newspaper ekathimerini:

Justice Minister Nikos Paraskevopoulos has said he is ready to sign an older court ruling that will enable the foreclosure of German assets in Greece in order to compensate the relatives of victims of Nazi crimes during the Second World War.

Greece's Supreme Court ruled in favor of Distomo survivors in 2000, but the decision has not been enforced.

Athens threatens to seize German assets over WWII reparations http://t.co/DhfxtMyfKz

11.19am GMT

The euro is now down more than 1% against the dollar at a1.0572. That's the lowest since April 2003.

It was as low as a1.0561 earlier this morning.

10.59am GMT

Greece has successfully sold a1.3bn of Treasury bills, covering the amount it needed to refinance a maturing issue.

The issue was more costly for the government however, with the paper sold at a yield of 2.7%, up from the 2.5% yield at a previous sale in February.

Issuing short-term T-bills is the only source of commercial borrowing for the leftist government of Prime Minister Alexis Tsipras. The country's EU/IMF creditors have set a 15 billion euro cap on such issues, which has already been hit.

Athens has asked for the ceiling on outstanding T-bills to be raised as foreign investors have increasingly fled its sales in recent months, but its euro zone partners have refused on fears it would be tantamount to central bank financing of governments.

10.48am GMT

We are hearing that the Troika's meeting with Greek officials has indeed been delayed and that representatives from the ECB, IMF and EC will arrive in Athens tomorrow - a day later than expected.

It is not clear why.

10.36am GMT

An update from Athens. Confusion reigns over whether the troika - ECB, IMF and EC - are meeting Greek officials today or not.

Officials in Athens are saying it is not at all clear when international auditors representing Greece's creditors will descend on the capital.

Officials in prime minister Alexis Tsipras' anti-austerity government are suggesting that it had still not been decided when inspectors will arrive.

10.15am GMT

The Treasury has responded to the disappointing UK industrial production/manufacturing figures.

A spokeswoman emphasises the quarterly figures, which paint a more picture - industrial production up 1.1% and manufacturing up 2.6%.

Today's figures from the ONS show manufacturing output grew by 2.6% in the three months to January compared to a year ago.

The UK has seen the fastest growth in the G7 but is not immune to the risks facing the global economy.

10.04am GMT

UK industrial production and manufacturing both fell unexpectedly in January according to the latest figures published by the Office for National Statistics.

Industrial production fell by 0.1% over the month, dragged down by manufacturing output which fell 0.5%.

The volatile monthly changes should not be over-interpreted, but with German manufacturing flat and French manufacturing down only marginally in January, we cannot exclude that sterling's current strength against the euro may hurt the export-dependent sector.

While UK manufacturing output should be relatively price-insensitive, the pound's rise by 11% against the euro since December could become a significant head-wind for market share and profitability for UK producers in Europe in the near-term.

January - good month for mining, not so good for manufacturing. pic.twitter.com/LsZjDQKixL

9.31am GMT

How low can the euro go against the dollar?

Few would have imagined in May last year when EURUSD was trading just shy of 1.4000 that nearly 10 months later the currency would have slid nearly 35% to be trading just short of 1.0700 with the potential to go even lower.

A good part of this move lower has occurred in the past three months sliding from 1.2480 at the beginning of December, as currency markets bet on the fact that the European Central Bank would finally pull the trigger on a large scale easing (QE) program.

8.54am GMT

Mario Draghi, president of the European Central Bank is oozing optimism at a conference in Frankfurt.

We saw a further fall in the sovereign yields of Portugal and other formerly distressed countries in spite of the renewed Greek crisis.

This suggests that the asset purchase programme may be shielding euro area countries from contagion.

Draghi claiming victory already with QE two days in. A bit premature perhaps?

8.32am GMT

The euro has hit another 12-year low against this morning, falling to $1.0640. It has fallen 12% since the beginning of 2015, and 35% since last May.

It is a story of dollar strength as well as euro weakness, as the US Federal Reserve moves closer towards an interest rate rise while at the opposite end of the scale, the European Central Bank is injecting a1.1 trillion into the financial system through quantitative easing.

#Euro just hits fresh 12yr lows at $1.0638 while #ECB's Draghi is speaking about contained QE risks in Frankfurt. pic.twitter.com/ipB6mJn8Nd

8.24am GMT

Following yesterday's sharp sell off, led by the FTSE 100 which closed down 2.5% or 174 points at 6,702.84, European markets are slightly up in early trading.

It's hardly a major rebound though, as those weak China numbers and an uncertain future for Greece weigh on confidence.

8.18am GMT

Fears over a sharper-than-expected slowdown in China were raised overnight following a slew of weak data from the national statistics bureau.

Industrial output grew 6.8% over the first two months of the year, compared with the same period last year, disappointing expectations of a 7.8% increase and the weakest rate of growth since late 2008.

Today's activity data have put pay to our expectation that GDP growth would strengthened slightly in Q1, with a slowdown now looking more likely.

Overall, the weakness in today's figures is surprising given that a sharp slowdown in Q1 of last year will have provided a flattering base for comparison.

Whoaa China economy: feb and it's all fall down. Coming here in 3 charts. First indust prod down to 6.8% back to 2009 pic.twitter.com/8rLpbGhX01

Next up China fixed asset investment down to 13.9pct agst expectations of 15%, and continuing downtrend shown here pic.twitter.com/t5QOT0DqFp

Finally China retail sales also slowing down with little let up pic.twitter.com/c63EjCYSWq

7.58am GMT

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

Data today from China confirms message from its President last week that its economy is slowing, weakest start to year since 2009.