FTSE suffers worst month since 2012 - as it happened

• FTSE100 recoups week's losses, but down sharply in August
• Asian markets make gains
• Oil extends its rise after the biggest one-day price increase in 6 years
• Main markets story tonight: Shares recover
  

5.33pm BST

The FTSE 100 has now closed having recouped the deep losses from earlier this week.

But looking over the month as August as a whole, things are not so rosy. The index suffered its worst monthly loss since 2012.

4.55pm BST

Reuters has been snapping the highlights from Fischer's CNBC interview, where importantly he has also said that with the economy getting back to normal the Fed will have to show that at some point by normalising rates and he has made no decision on September.

4.45pm BST

Comments from US policymaker Stanley Fischer are just hitting the wires, and he seems to share his fellow rate-setter William Dudley's view that the latest bout of market turmoil could push back a rate hike that, until this week, many had expected to come as soon as next month.

Fischer has told broadcaster CNBC that market volatility does affect the timing of interest rate decisions.

Fischer to CNBC: Economy is returning to normal; we've not yet made decision about September. http://t.co/ddr59GYiHq pic.twitter.com/tnBvYhbXeB

4.31pm BST

With the FTSE 100 hovering around the unchanged mark and the Dow Jones industrial average on Wall Street similarly flat on the day, there is tentative talk that calm has returned to markets.

Translated into Twitter-speak (using a cute cat, naturally), that's:

Stocks today vs. this week @CNBC pic.twitter.com/frj9Tk7xPg

4.27pm BST

Central banks are very much in focus over coming days and policymakers' words will be scrutinised for hints their fingers will be kept off the rate hike trigger for now given the latest market turmoil and signs global growth might have lost some steam. In the case of the ECB attention will be on clues to further loosening.

After the Jackson Hole meeting of central bankers in Wyoming over this weekend, when the Bank of England's Mark Carney is set to speak, attention will shift to the ECB's latest decision on policy for the eurozone next Thursday and particularly the accompanying press conference by president Mario Draghi.

On balance, we expect the ECB to reiterate its easing bias, using the same language used at the July meeting, when the risk of Grexit seemed imminent. At this stage, we would not expect the Bank to take any tangible policy actions, e.g. , by increasing the pace, the scope or the overall size of its QE programme. But we would not completely rule out any action either.

No change is expected with the refi rate likely to stand on hold at 0.05% and QE continuing at a pace of a60bn/month.

Most interest will, as ever, be focused on Mario Draghi's press conference, where questioning is certainly set to focus on the recent market turmoil. But attention will also be on the outlook for ECB policy in light of a return in disinflationary pressures following the continued fall in commodity prices and a stronger euro. Recent comments from the Vice President, ViItor ConstaIncio, and Chief Economist, Peter Praet suggested the Governing Council would be willing to consider additional supportive action should it be warranted.

3.53pm BST

There is just under an hour to go until UK stock markets close and traders can breathe a big bank-holiday-weekend sigh of relief after a week of dramatic swings.

As my colleague David Hellier reports global share prices look to be closing this rollercoaster week barely changed from how they began it, despite volatile movements that saw indices fall more than at anytime in the the past six years.

The UK hasn't been able to escape the consequences of China's 'Black Monday', with equity prices on course to see one of the largest monthly falls since 2008. But while global turmoil will hit the economy, it shouldn't undermine the expansion too much.

UK households' direct equity holdings are fairly small, suggesting that the effect of the drop in the FTSE on household spending will be limited. And while China's troubles are bad news for exporters, they are already delivering a silver lining in the form of cheaper oil and other commodities.

3.08pm BST

Time for a mid-afternoon summary:

2.46pm BST

At least one part of the Greek government handover has gone smoothly.

Twitter updated too #Greece @PrimeministerGR pic.twitter.com/lB4Y0XZXBf

2.35pm BST

The main US stock markets have opened lower this morning, dampening the mood after a two-day rally.

2.32pm BST

A quick history lesson:

2.28pm BST

Say hello to Greece's new prime minister, Vasiliki Thanou....

2.05pm BST

The increase in US consumer spending leaves economists pondering whether the Federal Reserve will raise interest rates next month.

One senior policymaker said he did not see the case for a change unless there is a major change in economic outlook.

Barring that [change in the economic outlook], I don't see a near-term increase as being appropriate, and by near-term I mean really though the course of 2015.

1.58pm BST

US consumer spending picked up a little in July, as drivers splashed out on new cars, in yet another sign that the world's largest economy is doing well.

Reuters has the details:

The Commerce Department said on Friday consumer spending increased 0.3%, after an upwardly revised 0.3% rise in June. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was previously reported to have gained 0.2% in June.

Economists polled by Reuters had forecast consumer spending rising 0.4% last month.

1.51pm BST

Greece's new finance minister has received the stamp of approval from the head of the eurogroup, Jeroen Dijsselbloem.

According to Dijsselbloem, Yiorgas Houliarikis "knows what he's doing". Well, that's a relief.

1.43pm BST

The International Monetary Fund broke its own rules to get involved in the Greek bailout, lending money that many officials knew would never be repaid. The sorry saga of the IMF's involvement in the Greek bailout is recounted in a Reuters special report that adds many new and interesting details.

Objectively we made Greece worse off ... You're lending to a country that is already unable to pay its debt, and that is not our mandate.

....that the Europeans could put together enough of a package, enough ring-fencing, enough of a backstop so as to show that Europe could sort out its own affairs.

"DSK (Strauss-Kahn) made a tactical error in letting the fund get trapped in this troika arrangement.

1.07pm BST

Inflation has been almost static for German consumers this summer, mainly as a result of tumbling oil prices.

German consumer prices rose 0.1% in August compared to the previous year, and were unchanged on the previous month, according to the federal statistics office.

12.58pm BST

After a two-day rally on Wall Street, US stock market futures have fallen, suggesting a bumpy ride into the weekend.

However as Reuters reports:

The three major US indexes looked set to end the week higher despite the market's cumulative 10% drop in the first two days of the week amid fears of a slowdown in China.

12.16pm BST

It's been a volatile week on the FTSE100 and the index has yet to make up this week's lost ground.

The index is currently trading around 6,161 points, down 0.49% on the day, and still short of the 6,187 level it was at a week ago.

11.54am BST

Greece's interim government is due to hold its first cabinet meeting later today.

Here are some pictures that have just arrived of Vassiliki Thanou being sworn in as prime minister on Thursday....

11.44am BST

Greece's economy grew by 0.9% from April to June, as official statisticians revised upwards an earlier GDP estimate.

Consumer spending was the main driver of growth, rising 2.2% compared with the second quarter of 2014.

11.26am BST

German consumer prices were very low in August, according to the latest batch of data, putting even more pressure on the European Central Bank to expand its stimulus programme (see last post).

Here are the key lines from Reuters:

In North Rhine-Westphalia (NRW), the federal state that tends to act as a bellwether for the national inflation rate, consumer prices held steady at 0.2 percent on the year in August.

In three other states annual inflation remained unchanged, while it slowed in one and turned negative in another. State data is used to calculate Germany's national inflation rate....

11.11am BST

Economic confidence in the eurozone ticked up a notch in August, according to the latest official data. The Economic Sentiment Indicator - a survey of businesses and consumers - went up 0.2 points to 104.2 in August. Across the entire EU, the indicator went up 0.4 points on last month to 107.

But despite a positive headline, nobody should get too carried away. Industry confidence in the eurozone fell 0.8 points, with managers less optimistic about future orders. Consumers were more confident about the future (+0.3), but less positive about the outlook for employment. Managers in services were the most upbeat (+1.3), expecting an increase in demand for their business.

At its current level, the eurozone ESI is consistent on past form with annual GDP growth accelerating to about 1.5%, better than Q2's 1.2% outturn. But that pace of expansion will do little to erode the spare capacity in the region and thereby provide a boost to inflation. And we expect growth to slow further in the coming months as the twin tailwinds of the previous falls in the euro and the oil price fade.

Moreover, there remains a clear risk that the Greek crisis could flare up again, with another election next month and the distinct possibility that Greece will fail its first bailout review due in October. This has the potential to damage economic sentiment across the eurozone and trigger renewed falls in the ESI. As such, the ECB may come under growing pressure to increase the pace of its asset purchases.

10.33am BST

The FTSE100 is still stuck in negative territory, but oil and mining stocks are racking up gains.

Oil firms are getting a boost from rising crude prices. Mining stocks have been helped by activist investor Carl Icahn, who disclosed on Thursday that he had taken an 8.5% stake in the mining and oil group Freeport-McMoRan. The billionaire investor has said he wants to talk about possible cuts in production, which may be good news for other producers.

10.16am BST

James Plunkett at Citizens Advice has picked out some of the most interesting economic charts from today's UK GDP data.

10.11am BST

The manufacturing association says the GDP figures are further proof that the British economy has not rebalanced yet.

During the last government, the chancellor George Osborne promised to unleash "a march of the makers", but progress has has been halting.

However, weakness in the manufacturing sector highlights concerns as to whether this will be sustained. Uncertainty as to whether Greece would leave the eurozone, and the pound strengthening against the euro, probably played a part in the weak performance.

10.00am BST

Economists were not surprised that UK growth statistics for April to June were left unrevised. More interesting than the headline figure is where the growth was coming from.

Samuel Tombs, senior UK economist at Capital Economics, notes that the British economy has been boosted by trade, but thinks this is unlikely to last.

Unsurprisingly, consumer spending grew strongly again, rising by 0.7% on the quarter. And overall investment rose by 0.9%, reflecting a hefty 2.9% increase in business investment, putting paid to the idea that uncertainty about the general election would weigh on capital expenditure. But the big news is that net trade made a hefty 1 percentage point (pp) contribution to quarterly growth - the most since Q1 2011....

Looking ahead, the pound's recent appreciation and the continued weakness of demand in some export markets such as the eurozone and China suggest that net exports are not about to play a sustained role in supporting the economic recovery.

9.47am BST

The latest GDP data from the Office for National Statistics means we can update our picture of the UK economy over the last decade.

The ONS has confirmed that the economy grew by 0.7% in the second quarter and by 3% growth in 2014.

9.33am BST

Hold on to your hats: UK economic output grew by 0.7% from April to June, unchanged on earlier estimates.

9.10am BST

A sense of of di(C)ji vu has returned to Athens this morning with the announcement of a new interim government.

With three women in top posts, including Vassiliki Thanou who takes over as prime minister, the new 22-member cabinet will be sworn in at 1 PM local time (11am BST). The inauguration of the interim government, which will lead Greece to polls on September 20, marks the official start of the election campaign. In a pithy 32-word statement to the leftist newspaper Avgi, the outgoing prime minister Alexis Tsipras said:

Today the big election battle begins. The Greek people will give a powerful mandate [to the next government] for the present and the future. Greece cannot go back. And it will not go back. It will go forward."

9.03am BST

We haven't even had September's snap election in Greece, but political insiders are already talking about a second autumn poll.

Stavros Theodorakis, leader of the centrist To Potami party, told Kathimerini that former Greek Prime Minister Alexis Tsipras's refusal to cooperate with pro-European parties after next month's ballot may complicate the formation of a government and force a new poll.

The risk is that if SYRIZA doesn't get an absolute majority in parliament, that if the allies it wants don't make it to parliament, then we'll go to new elections again in November and December.

Trained at the Sorbonne in Paris, the 65-year-old mother of three has been described by those who know her as a stickler for detail and "deeply principled." In the five years that Greece has battled with the demands of international creditors, she has played a leading role as a trade unionist protecting colleagues from pay cuts exacted on the judicial sector.

8.45am BST

So much for that. The early gains on the FTSE100 have largely fizzled out: the index is flat at the moment.

Tony Cross, market analyst at Trustnet Direct, explains what is going on.

London's FTSE-100 is making some modest gains as the final trading session of the month gets underway but the market doesn't seem willing to build on the pace seen in China overnight. As we've noted before, there's still a very real chance that further volatility will be seen in the near term and with the long weekend fast approaching, there's a good chance that some may be hoping to book opportunistic profits ahead of the break.

8.33am BST

Every year, the great and the good of central banking head off to the mountains of Wyoming to ponder the state of the global economy.

It's an apt subject given the strangely subdued state of inflation in many advanced economies, including persistently sluggish price and wage gains in the U.S. despite the improving labor market.

8.08am BST

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

After a week of crazy swings on global markets, optimism is breaking out on trading floors.