Stock markets rally as France vows to boost security spending - as it happened
French plan to boost security spending will not break fiscal rules, says Commission
- Manuel Valls: Security ahead of deficit reduction
- EC: We won't block you
- Markets jump as France plans spending blitz
- Analysts: French attacks won't derail world economy
5.16pm GMT
With investors seemingly convinced that the Paris attacks will not have a long term effect on the global economy - and even if they did, central banks would act to provide more stimulus - leading shares enjoyed a buoyant day. Defence companies were among the main risers as France stepped up its air strikes on Isis, while travel and leisure businesses recovered from Monday's losses. News that Greece had reached an agreement with its creditors which could release a2bn of bailout funds also helped sentiment. So the final scores showed:
5.01pm GMT
More on US inflation, and financial information group Markit also believes a rate rise is likely next month:
The sustained strength of underlying price pressures... adds weight to the belief that the Fed will start hiking interest rates in December, especially as the odds look to be tilted more towards inflation rising than falling in coming months.
US #inflation shows signs of edging higher. Here's our analysis: https://t.co/5cFQXqW9cN pic.twitter.com/mMzU4J0mxx
4.33pm GMT
#Greece 42 ann of polytechnic uprising: march so far peaceful; heavy police presence in anticipation of clashes w anti-establishment bloc
4.18pm GMT
Still with Greece, and here is the official European Commission announcement on the agreement between the country and its creditors:
The Greek authorities and the institutions have reached substantive agreement on all outstanding issues regarding the measures included in the first set of milestones and on the financial sector measures that are essential for a successful recapitalisation process.
This is good news.
4.05pm GMT
Here's more on the marches underway in Greece to mark the uprising against military rule:
Big student rally marching in downtown Thessaloniki, chanting anti-imperialist & anti-fascist slogans #17ngr pic.twitter.com/XzbnrkyT5V
Police vehicles lined up blocking Syntagma square and the parliament ahead of #17ngr demo @JohnKemmos #Greece pic.twitter.com/CnMUubn0QU
#Greece: Thousands rally now in #Athens for the 42nd anniversary of #polytexneio #17Igr pic.twitter.com/68AXO3lQw2
3.08pm GMT
US markets have slipped back in early trading after Monday's surge, with energy shares hit by weakness in the crude oil price amid renewed concerns about oversupply and falling demand. Brent crude is currently 1.9% lower at $43.73 a barrel.
Investors were also cautious after US inflation figures suggested there was little to prevent the Federal Reserve from raising interest rates at its meeting next month.
2.57pm GMT
Here are more details about the agreement reached between Greece and its creditors to free up a12bn of bailout cash and funds to recapitalise the country's banks.
One of the main sticking points seems to have now been resolved: there has been a compromise on foreclosing on people who get into arrears with their mortgages, which will protect around 60% of endebted households (see earlier). AP reports:
Pierre Moscovici, European Commissioner for economic and financial affairs, said Greece and the creditors had reached a deal on all outstanding issues, a development that also brings promised discussions on reducing Greece's debt burden one step nearer.
"I am happy to confirm that agreement has been reached on the remaining measures needed to complete the first set of milestones," he told a press briefing in Brussels.
"We expect finalization of the process to take place shortly following the swift adoption of necessary legislation by the Greek Parliament on Thursday," he added.
Once Greek lawmakers approve the measures, Moscovici said the institutions that oversee Greece's bailout program will assess Athens' compliance, paving the way for the cash disbursements.
2.34pm GMT
Back with Greece:
#Greece recap: Govt has agreed w/ creditors on 48 prior actions (not on NPLs yet). EWG today. Bill vote on Thu. New EWG possibly after.
2.31pm GMT
More US data, and industrial production fell in October for the second straight month.
It dipped by 0.2% after a 0.2% decline in September. That compares to expectations of a 0.1% rise last month. ING's Rob Carnell again:
A mixed production report from the US for October, with overall production down 0.2% month on month, but a better then expected manufacturing figure, which registered a 0.4% month on month gain.
All of the weakness was contained in the utilities and mining sectors - with mining no doubt reflecting ongoing softness of production in the oil and gas sector. We doubt policy-makers will be too disappointed with these figures, though the overall strength of the US economy does mask important areas of weakness, such as the goods producing sector, and additional headaches for the Fed as it seeks to normalise policy rates.
2.20pm GMT
October's US inflation figures give more fuel to the Federal Reserve to raise interest rates at its December meeting, analysts believe.
Inflation rose 0.2% year on year, up from 0.1% in September, with the core rate of inflation - which strips out food and energy - unchanged at 1.9% year on year.
Ultimately, the inflation numbers do nothing to dampen speculation that the Fed is limbering up to hike rates for the first time since June 2006 at its FOMC meeting next month.
By February next year, there should be very little drag on headline inflation from oil/energy prices, unless we see a considerable further decline in oil from its already depressed levels. And as we approach this point, we should see headline inflation rapidly begin to close in on these higher core figures.
This of course raises the prospect that if the Fed does indeed raise rates in December, as we and the market now believes likely, and if the October hourly wages growth increase was not a one off, then the Fed is going to come under rising pressure to consider a further March hike in addition to any December increase.
2.08pm GMT
Here's a quick recap
"Investors are showing resilience to the recent attacks in Paris despite mounting worries over security in Europe."
"The security of citizens in France and everywhere is the absolute priority.
The Commission will show full understanding for that priority".
"The latest developments after the terror attacks in Paris will strengthen the political support for ECB actions in order to extend its balance sheet further at its upcoming meeting on 3 December.
1.46pm GMT
Her's some colour (or color, perhaps) from today's US inflation report, showing how prices of essentials and non-essentials alike are creeping up.
U.S. medical care services inflation picking up, according to the BLS pic.twitter.com/HFOgDnyjMV
Cocktail hour is getting pricier: CPI shows alcoholic beverages at home jumped 3.4% in October, biggest jump since 1991
New post-crisis high for CPI services ex-energy pic.twitter.com/7tLeCZqOXF
1.34pm GMT
Just in... America's inflation rate rate has inched higher in October.
Headline vs. Core CPI: pic.twitter.com/Y3dKMZOgK7
1.02pm GMT
Celebrations and marches are currently underway in Greece to mark the 42nd uprising against military rule - a student revolt that paved the way to the collapse of seven years of US-backed dictatorship.
12.59pm GMT
The Greek stock market has jumped by 2.5% today, after a preliminary deal was finally struck between Athens and its lenders over how to address defaulting mortgages.
The agreement must be passed by the Greek parliament, but it should unlock a2bn of aid and a10bn of new capital for Greece's banking sector.
Greek 10y ylds drop to lowest since Oct2014 as #Greece, Creditors seem to reach agreement on foreclosure legislation pic.twitter.com/PaQ5cM27yB
#Greece, the new foreclosures framework, via @MacroPolis_gr pic.twitter.com/MvvJicFUg0
"We will table the agreement in parliament today prior to a vote probably on Thursday."
12.12pm GMT
Money continues to pour into defence stocks this morning, on anticipation that Europe will be spending rather more on security measures.
Related: Paris terror attacks: France makes formal request for EU help - live
"We expect extra spending on policing, private security and military intervention."
11.38am GMT
Italy, Spain, Austria and Lithuania have all been told that their budgets for 2016 risk breaking EU targets:
Four euro zone countries risk breaking EU rules with 2016 budgets https://t.co/AURIsWp2mI via @ReutersUK
11.30am GMT
The Paris stock market continues to climb - now up 113 points, or 2.3%, at 4918.
$CAC +2.35%
11.24am GMT
Commission vice-president Vladis Dombrovskis has also indicated that Brussels won't try to block France's new security spending blitz.
I'm "confident that we can find a way" to adjust budget targets to account for the events in Paris, he told Bloomberg TV.
Work of art: Watching @HansNichols in action as @VDombrovskis about to go live on @BloombergTV pic.twitter.com/7WggPS0I1e
11.06am GMT
Pierre Moscovici's team have also tweeted that the Commission will show an "intelligent and humane" approach to Paris:
.@EU_Commission a une approche intelligente et humaine. Pacte de stabiliti(C) pas rigide mais flexible. @ecfin #ParisAttacks
11.04am GMT
The European Commission has just backed France's decision to boost security spending at the expense of deficit reduction.
Economic and financial affairs commissioner Pierre Moscovici has told reporters in Brussels that the EC will show "full understanding" of France's situation, after Paris said it will not get its deficit below the target of 3% of GDP by 2017.
"One thing that is clear in the current circumstances is that in this terrible moment the protection of citizens, the security of citizens in France and Europe is the priority."
.@pierremoscovici "nous comprenons prioriti(C) sur securiti(C). pacte de stabiliti(C) n'empiche pas choix legitimes des gouvernements" @EU_Commission
10.48am GMT
France's pledge to spend whatever it takes to defeat ISIS is pushing shares higher still.
President Francois Hollande is looking to flout EU rules over budget deficits in order to cancel defence cuts, while promising heightened security across the board. The fiscal boost of expansion of defence spending is likely to be something that will play out across Europe as the war against ISIS intensifies and the 4% rise in BAE shares so far this week perfectly illustrates this.
The downing of a Russian plane over Egypt by ISIS-linked terrorists only goes to expand the idea that military spending will rise globally over time.
Related: FTSE jumps nearly 2% with security group Smiths leading the way
10.20am GMT
German investor confidence has bounced back.
Data just released by the ZEW institute showed that economic sentiment rose in October, despite the slowdown in emerging markets this summer.
German #ZEW raises despite #ParisAttacks in November. German economy should perform well in the final quarter 2015.
German econ sentiment rebounds. ZEW expectations of growth jumps to 10.4 in Nov. Markets ignore ZEW. Euro at $1.0662 pic.twitter.com/5grSXcCtTa
10.09am GMT
These falling prices do raise fears that Britain is heading into deflation.
But Ian Stewart, chief economist at Deloitte, argues that negative inflation should be welcomed:
"Falling prices of essentials, including food and energy, are delivering a windfall bonus to UK consumers, bolstering spending power and enabling consumers to spend more on cars and "big ticket" items.
This reduction in prices, combined with rising real incomes and ultra-low interest rates, should help the UK recovery plough on despite the headwinds from emerging markets."
10.04am GMT
A reminder from RBS that cheaper oil played a key role dragging down UK inflation:
UK inflation & changes in the price of oil. The special (post-crisis) relationship. pic.twitter.com/I7lV6yIeMS
9.58am GMT
Something curious happened in the drinks sector last month too.
9.52am GMT
Education prices dragged back inflation in October, according to the ONS.
Another downwards push on UK #CPI inflation came from past university tuition fee rises washing out of the numbers #GBP #BoE
9.45am GMT
This chart shows which items are cheaper than a year ago, and what still costs more:
9.39am GMT
UK inflation has been bobbing around zero all year:
9.34am GMT
UK inflation was minus 0.1% year-on-year in October, meaning prices are still falling (a little) across the economy.
That matches September's reading, and is the first time the annual CPI has fallen two months running since the series was created in 1996.
9.15am GMT
The boss of budget airline easyJet has predicted that passengers won't be deterred by the Paris attacks.
"If you look at any tragic event that has happened - and it's been terrible what has happened in Paris and we have over a thousand people out there - post-9-11 and post-7-7 things start to get back and people get mobile and they want to travel again,"
"Our profitability has been driven by more passenger demand " There is a real demand for travel and I don't think that's going to abate."
Related: EasyJet's profits hit record for fifth consecutive year
8.45am GMT
Speculation that the European Central Bank will ease monetary policy next month is pushing the euro down.
The single currency has hit $1.10647 against the US dollar - the lowest since early April.
Mario Draghi and the #ECB will be happy to see the Euro at 1.065 and the UK Pound at over 1.42 #QE #CurrencyWars
8.40am GMT
Tony Cross, analyst at TrustNet Direct, sums up the morning:
London equities are certainly making good progress shortly after the open, with the vast majority of FTSE-100 constituents in positive territory and the index as a whole already having added in excess of 1%.
Strong gains in both US and Asian sessions appears to be the driver here, although it's difficult to pin the move on any single piece of fundamental data - but it's clear that at least for now, the majority of stocks globally remain unfazed by last week's terrorist attacks in Paris.
8.38am GMT
Confidence is rippling through Europe's stock markets, pushing the main indices all higher this morning.
There are solid gains in London, Paris, Frankfurt and Milan.
8.28am GMT
French hotel group Accor was one of the big fallers on Monday, dropping 7% at one stage.
But it's leading the risers on the Paris market index today, up nearly 2%:
8.17am GMT
France's prime minister has confirmed that Paris will not be sticking to the budget rules imposed by Brussels, as it beefs up its security spending.
The deficit target will "necessarily be exceeded" as France amends budget plans to hire 10,000 more police and gendarmes and boost their resources, Valls told France Inter radio.
"The European Commission must understand," Valls said, that the struggle against Islamic State militants "concerns France but also concerns Europe".
8.03am GMT
European markets are open, and rallying.
The FTSE 100 has jumped by more than 1%, gaining 70 points to 6215.
8.00am GMT
World stock markets are pulling a 'stunning u-turn' today, says Mike van Dulken of Accendo Markets.
It's a sign of the times how easily markets can digest such geopolitical horrors and demonstrate such resilience in the face of atrocity.
Stock market gains comes in spite of lingering worries about a slowing China (Copper has hit fresh 6 year lows) and the US dollar hitting new highs as traders price in a December US rate hike and global central bank policy divergence.
7.53am GMT
It's Turnaround Tuesday in Tokyo.
Having shed 1% on Monday following the awful events in Paris, Japan's benchmark index recovered its losses - and more - today to finish 1.2% higher.
"Investors think that the attacks in Paris would have little impact on the global economy in the long-term."
7.45am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
World stock markets are rallying today, as international investors put aside worries that the tragic attacks in Paris will derail the global economy.
Related: Billions wiped off European travel shares after Paris attacks
Updated European opening calls courtesy of IG #FTSE +107, #DAX +148, #CAC +90
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