Gas prices have hit their highest level for seven months amid rising fears of a squeeze on global supplies.
European wholesale gas prices rose to 53 euros per megawatt hour (MwH) – compared with 35 euros at the start of September.
The prices are still well below the 150 euros/MwH seen during the energy crisis last December and the all-time high of 345 euros/MwH seen in March 2022, but there are fears that an escalating Israeli-Hamas conflict could see further rises.
Traders were concerned over three separate potential impacts on supplies. Perhaps the biggest is that Israel, itself a major gas producer, has ordered US major Chevron to halt production at its Tamar gasfield.
Tamar produces about half of Israel’s 20 billion cubic metres of annual gas production and is also the closest of its three fields to Gaza. About a third of Israeli production is exported, either via pipeline to Egypt or as LNG to Europe. For comparison, the UK uses about 75 billion cubic metres of gas a year.
Separately, there are concerns that a rupture in the 45-mile-long Baltic Sea gas pipeline from Finland to Estonia was due to sabotage. Finnish president Sauli Niinistö has discussed the breach with Jens Stoltenberg, Nato secretary-general.
The pipeline is not a vital one but, as with the sabotaged Nordstream 2 pipeline, the incident shows the vulnerability of subsea infrastructure. The UK and Germany are both highly dependent on the much larger pipelines carrying gas from Norway.
Meanwhile, in Australia, workers at Chevron’s liquefied natural gas plant are threatening strikes at the Gorgon and Wheatstone facilities, which account for roughly 7pc of global LNG supply.
One analysis, by Trading Economics, which tracks economic indicators, said: “Prices have surged more than 26% this week due to concerns about gas supplies as the heating season approaches, with colder temperatures expected.
Tom Faulkner, Head of Assets & Infrastructure and Networks at Cornwall Insight, said the damage to the Finnish pipeline was particularly concerning for European supplies.
He said: “While the damage to the Finnish pipeline may not have immediate physical consequences, it’s expected to raise concerns among traders regarding potential threats to other gas infrastructure, in a similar fashion to NordStream.
“Consequently, although it may not directly affect supply security, this combined with events in the Middle East, will undoubtedly contribute to a rise in gas prices, which will ultimately filter through to consumers”.
Read the latest updates below.
05:34 PM BST
FTSE 100 edges up as economy rebounds in August
The FTSE 100 has gained 24.75 points, or 0.32pc, to close at 7,644.78.
New data from the Office for National Statistics showed that gross domestic product (GDP) rose by 0.2pc in August, compared to a 0.6pc drop in July.
While the ONS data only marks a slight rebound, the data puts the UK one step closer to avoiding a recession this year, which is defined as two consecutive quarters of negative GDP.
Energy stocks and pharmaceuticals helped lift the FTSE, with BP leading – increasing by 3.04pc. Meanwhile, big property companies were the biggest fallers including Taylor Wimpey which fell by 4.93pc and Land Securities which dropped by 1.51pc.
The pound lost ground against the US dollar this afternoon, and was down by around 0.8pc to 1.2213 dollars. Sterling was down by about 0.1pc to 1.1575 euros.
04:50 PM BST
Germany’s economy minister says the country’s winter gas supply is secure
Germany will avoid gas shortages this winter, Berlin’s economy minister said.
Robert Habeck said: “The [gas] reserves are full. If everything goes well, we will get through the winter without any trouble.”
Germany was highly reliant on gas from Moscow before the Russian invasion of Ukraine. But after the war began its supplies stopped and key pipelines connecting Russia and Germany via the Baltic Sea were sabotaged.
In response the country scrambled to reduce its gas usage and was forced to restart coal-fired plants.
In the end, the coal plants, which were not slated to run beyond March 2024, would not be necessary through the coldest months around the turn of the year, Habeck said.
The rapid expansion of gas import capacity with the construction of several LNG terminals, meant Germany had a “buffer”.
Germany’s gas reserves are currently 97pc full, according to the federal regulator.
04:31 PM BST
Google warns the EU that it will fight attempts to break up ad business
Google, owned by American company Alphabet, has vowed to fight the European Union’s threat to break up its ad business, according to Bloomberg.
In a letter to EU watchdogs, Google has warned that it would not accept attempts to force the company to sell off its advertising technology arm after Margrethe Vestager, the EU’s antitrust chief, argued it was the only way to restore competition.
Google is set to formally oppose this before the end of the year.
In June the EU said it was concerned about Google favouring its own online display advertising technology over competing providers.
At the time Ms Vestager said: “Google is present at almost all levels of the so-called ad tech supply chain.
“Our preliminary concern is that Google may have used its market position to favour its own intermediation services.”
04:08 PM BST
New York’s finance workers hit 20-year high
New York City currently has more securities-industry workers than at any point in more than 20 years, according to a report New York State Comptroller Thomas DiNapoli released today.
The City’s securities industry accounted for 195,100 jobs on average for the first eight months of 2023.
Earnings and revenues have fallen, however, in part due to high interest rates.
Meanwhile Wall Street’s first-half profits were down 4.3pc to August 2023, dropping to $13bn according to the report.
Mr DiNapoli said: “The securities industry’s two years of record profits helped stabilise New York’s economy in difficult times.
“Since then the industry has maintained profits consistent with pre-pandemic levels. But these are volatile times in America and globally, and Wall Street’s relatively stable profits and employment levels could change quickly.
“Further declines could weaken New York’s tax revenue from the securities industry and have repercussions for our state and city budgets.”
03:31 PM BST
With that, I’ll duck out and pass the blog baton onto Riya Makwana, who will make sure you are kept up to speed with the latest.
I’ll leave you with this image of one of eight new designs due to appear on UK coins, which have been unveiled by the Royal Mint.
The new designs will reflect the King’s passions for conservation and the natural world.
03:23 PM BST
Halfords shares surge amid takeover speculation
Bike retailer Halfords has enjoyed a 15pc jump in its share price this afternoon amid takeover speculation.
Its stock leapt as much as 19pc after it was mentioned in a report by “Betaville”.
It said there is speculation that a 270p per share offer was rejected.
Halfords has been contacted for comment.
03:07 PM BST
US markets slide into red amid stubborn inflation
Wall Street stocks have dipped after the stable US inflation report, with shares in Detroit car giants falling after the expansion of strike action.
The US consumer price index rose 3.7pc in September from a year ago, in line with analyst expectations but still above the Federal Reserve’s 2pc inflation target.
Oxford Economics said the report will not change Fed’s message “that they can afford to be patient,” while some other analysts still expect the Fed to raise rates again in 2023.
The Dow Jones Industrial Average has fallen 0.4pc, while the broad-based S&P 500 has slipped 0.2pc.
By contrast, the tech-rich Nasdaq Composite Index was up 0.1pc.
Ford fell 3pc after the United Auto Workers broadened a strike on Wednesday, halting work at the highly profitable Kentucky truck plant that employs 8,700 workers.
02:51 PM BST
Ikea promises to cut furniture prices as costs ease
Ikea has promised to pass on cost savings to customers by cutting prices over the next year as pressures in its supply chain start to ease.
The company said that it has a “clear intention” to reduce prices this financial year, ending next August.
UK and Ireland chief executive Peter Jelkeby said:
Despite economic and geopolitical instabilities, we remain committed to making a positive difference in our customers’ lives; especially for those with the thinnest wallets.
Knowing that our customers continue to navigate a cost-of-living crisis, we absorbed significant cost increases to mitigate price rises as much as possible, investing in promotions, special offers, and, for the first time, an Easter sale.
As we see supply chain costs start to ease, we have a clear commitment to lowering prices accordingly – ensuring we remain firmly on the side of the many people.
It came as the business announced a 11.9pc rise in turnover in the last financial year to £2.5bn. Globally, parent company Ingka Group’s retail sales rose 5.7pc to €41.7bn (£36bn).
The company said that 38.5pc of its UK sales had been made online, up from 35.8pc a year earlier.
02:34 PM BST
Wall Street cautious as inflation unmoved
US stock markets inched higher after inflation figures showed price rises held steady in September.
The Dow Jones Industrial Average was fractionally higher after the opening bell at 33,810.48.
The broad-based S&P 500 was up less than 0.1pc while the tech-heavy Nasdaq Composite shifted less than 0.1pc higher to 13,665.10.
02:29 PM BST
Boots owner in £810m cost cutting plan
The US owner of Boots aims to cut costs by up to $1bn (£810m) as the troubled cosmetics and pharmaceutical retailer prepares to welcome a new boss.
Walgreens Boots Alliance, which announced in June plans to shut 300 stores across Britain over the next year, revealed the cost cutting drive as it slumped to a loss this year.
It made a net loss of $3.1bn (£2.5bn) in its 2023 annual results, compared to a profit of $4.3bn (£3.5bn) the previous year, driven by $5.5bn set aside for legal costs related to the corporation’s role in the US opioid crisis.
It also issued profit guidance that was below estimates on Wall Street for the forthcoming year, expecting adjusted earnings of $3.20 to $3.50 a share in its 2024 results, while the average of analysts surveyed by Bloomberg was $3.70.
It said it expects the impact of its cost cutting drive to start taking effect from the second quarter of its next financial year.
The results add to the challenges awaiting Tim Wentworth, who will take over as chief executive on October 23.
The business made a net loss of $180m (£146.3m) in the three months to the end of August, although this was down from a $415m (£337.2m) loss in the same quarter a year earlier. Walgreens’ share price has fallen 40pc so far this year.
Interim chief executive Ginger Graham said: “Our performance this year has not reflected WBA’s strong assets, brand legacy, or our commitment to our customers and patients.
“In just six weeks, we have taken a number of steps to align our cost structure with our business performance, including planned cost reductions of at least $1bn, and lowered capital expenditures by approximately $600m.”
02:16 PM BST
‘Reassuringly uneventful’ US inflation report signals end of interest rises, say analysts
Consumer inflation held steady in the United States last month, according to government data released Thursday, giving policymakers some reprieve in their battle to tamp down price increases.
The consumer price index (CPI), a closely watched inflation gauge, rose 3.7pc from a year ago, the same rate as in August, the Labor Department said.
However, core inflation, which strips out volatile food and energy prices, dropped back to 4.1pc from 4.3pc the previous month to its lowest level since September 2021.
Andrew Hunter, deputy chief US economist at Capital Economics, said: “Overall, there is nothing here that will convince Fed officials to hike rates at the next FOMC meeting, and we continue to expect a more rapid decline in inflation and weaker economic growth to result in rates being cut much more aggressively next year than markets are pricing in.”
Neil Birrell, chief investment officer at Premier Miton, said: “The last US inflation report before the Fed’s meeting later this month shouldn’t give them too much of a headache.”
Seema Shah, chief global strategist at Principal Asset Management said: “After the shock and awe of last week’s jobs report, today’s CPI print is reassuringly uneventful.”
🧊 THE SEPTEMBER CPI REPORT 🧊
😮Inflation’s progress stalled last month
⛽ Gas prices were the main culprit
🧊Services inflation is still slowing down
🗻This report probably isn’t enough to change the Fed’s plans pic.twitter.com/IVgBQtNO0Q
— Callie Cox (@callieabost) October 12, 2023
01:57 PM BST
US jobless claims remain at historic lows
The number of Americans applying for unemployment benefits was unchanged last week, remaining at historically low levels in another sign that the US job market remains strong in the face of higher interest rates.
Unemployment claims stayed at 209,000 for the week ending October 7, the Labor Department reported.
The four-week moving average of claims, which strips out week-to-week volatility, fell by 3,000 to 206,250.
The numbers, a proxy for layoffs, continue to show that American workers enjoy extraordinary job security.
When the Federal Reserve began raising its benchmark interest rate last year to rein in surging consumer prices, many economists expected the United States to sink into recession.
But the economy and the job market have remained sturdy even as higher rates have brought inflation down steadily from the four-decade highs reached in 2022.
01:49 PM BST
Union threatens more walkouts after major Ford closure
Car workers have escalated their strike action against Detroit’s Big Three manufacturers after shutting down Ford’s largest factory.
The United Auto Workers union is now threatening Jeep maker Stellantis with action similar to Wednesday night’s surprise walkout, where 8,700 members left their jobs at Ford’s Kentucky truck plant in Louisville.
Today, union President Shawn Fain hinted at further action against Stellantis.
He said: “Here’s to hoping talks at Stellantis today are more productive than Ford yesterday.”
01:37 PM BST
Pound drops as US inflation holds firm
The pound has dropped by 0.3pc against the dollar after US inflation held at 3.7pc.
Bond yields have moved higher amid concerns that the stubborn inflations means that the Federal Reserve will need to keep interest rates higher for longer.
The yield on the benchmark 10-year US Treasury bond is up four basis points to 4.6pc while the 10-year UK gilt coupon has risen nearly five basis points to 4.37pc.
01:31 PM BST
US inflation remains at 3.7pc
US inflation held steady last month as the Federal Reserve’s series of interest rate rises slow the economy.
The consumer prices index for September rose by 3.7pc in September, according to the Labor Department, unchanged from the previous month and slightly ahead of economists’ expectations for a fall to 3.6pc.
01:23 PM BST
Bosses giving out bigger pay rises to keep staff, says Pill
Companies are handing existing workers bigger pay rises as bosses focus on holding on to talent rather than hiring new workers, according to the Bank of England’s chief economist.
Our economics editor Szu Ping Chan has the latest from the IMF and World Bank meeting in Morocco:
Huw Pill said Britain’s jobs market was seeing an increasing split between what companies were willing to pay new and existing staff.
He added that policymakers were focusing on pay rises, services inflation and vacancies as they look ahead to their next decision on interest rates in November. The Monetary Policy Committee held rates at 5.25pc in September and signalled they may have peaked.
While Mr Pill said there were signs that the labour market was “loosening” amid a drop in the number of vacancies, businesses were now focusing on retaining existing staff.
He told a panel in Marrakech: “Increasingly, given the difficulties in recruiting we’re seeing labour hoarding behaviour and perhaps the re-emergence of insider-outsider dynamics in wage setting.
“We certainly see a big discrepancy between what surveys tell us about new hires, what they’re being paid, versus incumbents and what they’re being paid. And that type of discrepancy might suggest the labour market may be behaving in a different way.”
However, he stressed that policymakers remained focused on bringing inflation back to the 2pc target and insisted that policy would not “turn on a sixpence”, despite recent turbulence in financial markets.
12:46 PM BST
Boots boosted by higher UK footfall
In the UK, Boots revealed a jump in sales over the past quarter as it was buoyed by surging demand for skincare products.
The pharmacy operator said retail sales increased by 11.7pc year-on-year over the three months to August 31. It meant sales were 12.5pc higher over the year to August.
The company said it benefited from higher footfall across its large city centre shops, shopping centres and travel stores.
It also said it was supported by a jump in skincare sales, which grew “nearly 25pc” over the latest quarter.
Seb James, managing director of Boots UK and ROI, said:
I am really encouraged to see continued strong performance as the work that we have done to expand our ranges, drive value and innovate in beauty seems to be resonating extremely well with customers.
We have great plans for the year ahead including our new Beauty store in Battersea, a further extension of our beauty category, expansion of our online doctor service and much more. I would like to thank the 52,000 people that make up the
Boots business for the hard work and resilience that has made this possible.
12:23 PM BST
Watchdog tells companies how to legally collude on green projects
The UK’s competition watchdog has introduced guidance on how businesses can collaborate on green goals without breaking the law.
The Green Agreements Guidance was published by the Competition and Markets Authority (CMA) today, following an extensive consultation with the business community.
The advice outlines how competition law applies to environmental sustainability agreements between firms operating at the same level of the supply chain – known as horizontal agreements.
The CMA set out the key principles which apply, along with practical examples that businesses can use to inform and shape their own decisions when working with other companies on environmental sustainability initiatives.
The watchdog also said it does not expect to take enforcement action against agreements that are in line with the guidance.
12:07 PM BST
Virgin wins court battle over brand being ‘of high repute’
A Virgin company has won a High Court fight with an American train operator which pulled out of a deal after alleging that the “Virgin brand” had stopped being a “brand of international high repute”.
Virgin Enterprises said Brightline Holdings was in breach of a trademark licence agreement, having agreed to rebrand its rail services in the United States as “Virgin Trains USA”, Judge Mark Pelling heard.
Today, the judge ruled in favour of Virgin.
Judge Pelling said: “I conclude that Brightline has failed to prove any of the three issues it had to prove if it was to succeed in its defence and for that reason the claim succeeds.”
11:54 AM BST
Ecclestone given suspended sentence after admitting £400m fraud
Ex-Formula One boss Bernie Ecclestone has been sentenced at Southwark Crown Court to 17 months in prison suspended for two years, after pleading guilty to fraud.
Mr Ecclestone admitted failing to declare more than £400m held in a trust in Singapore to the Government.
The 92-year-old said “I plead guilty” at Southwark Crown Court on Thursday while standing in the well of the court wearing a dark suit and grey tie.
On July 7 2015, the billionaire failed to declare a trust in Singapore with a bank account containing around $650m, worth about £400 million at the time.
Read on for details.
11:27 AM BST
Wall Street confident ahead of US inflation report
The main stock indexes in the US moved higher in premarket trading as investors expect inflation data to showed price rises eased in September.
The Labor Department report, due at 1.30pm UK time, is expected to show consumer prices rising by 3.6pc in the 12 months to September. The core figure, which excludes volatile food and energy prices, is expected to stand at 4.1pc, down from 4.3pc in August.
It comes as the yield on the benchmark 10-year note fell for the third straight day, helping megacap stocks, including Apple, Alphabet, Tesla, Nvidia, Meta and Amazon advance between 0.2pc and 0.6pc before the opening bell.
Minutes from the Fed’s September policy meeting showed that policymakers were turning cautious due to the growing uncertainty around the path of the US economy, as well as volatile data and tightening financial markets posing risks to growth.
Traders put the chance of interest rates remaining unchanged in November and December at around 91pc and around 72pc, respectively, according to CME’s FedWatch tool.
In premarket trading, the Dow Jones Industrial Average, S&P 500 and Nasdaq 100 were all up about 0.4pc.
11:18 AM BST
Barclays scraps £17.8m of bonuses and share awards to former boss
Barclays has scrapped a series of payouts it was due to give to its former boss Jes Staley after regulators said he misleading them over the nature of his relationship with convicted sex offender Jeffrey Epstein.
The bank said that following the FCA’s decision, it had decided Mr Staley was ineligible for, or would forfeit, bonuses and share awards totalling £17.8m.
It had already suspended all of Mr Staley’s deferred bonuses and long-term share awards while the watchdog investigated.
It said in a statement:
As previously disclosed, the remuneration committee of the board of Barclays exercised its discretion to suspend all of Mr Staley’s deferred bonus and LTIP awards pending further developments in respect of the regulatory and legal proceedings related to the FCA and PRA investigation regarding Mr Staley.
Following consideration of the detailed findings in the decision notice and the information referred to in it, the remuneration committee has concluded that Mr Staley should be ineligible for or forfeit a number of awards.
Mr Staley’s payouts that have been scrapped by the bank include the annual bonus award for 2021, long-term share payouts that had not yet vested worth £15.7m, as well as £2.1m in deferred bonus awards from earlier years that have been clawed back.
10:53 AM BST
Ex-Barclays boss Staley fined and banned over ‘misleading’ Epstein statements
The Financial Conduct Authority has fined former Barclays chief executive Jes Staley £1.8m and banned him from “holding a senior management or significant influence function in the financial services industry”.
The regulator said it found that Mr Staley “recklessly approved” a letter sent by Barclays to the regulator containing “two misleading statements” about his relationship with disgraced financier Jeffrey Epstein.
Mr Staley, who stepped down from the bank in November 2021, has referred the decision to the Upper Tribunal to present his case, the FCA said.
The FCA stressed that these finding are “provisional and reflect the FCA’s belief as to what occurred and how it considers his behaviour should be characterised”.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “A CEO needs to exercise sound judgment and set an example to staff at their firm. Mr Staley failed to do this.”
She added: “It is right to prevent him from holding a senior position in the financial services industry if we cannot rely on him to act with integrity by disclosing uncomfortable truths about his close personal relationship with Mr Epstein.”
A spokesman for the Bank of England’s Prudential Regulation Authority said: “We support the FCA’s decision announced today against Jes Staley. It is imperative that senior managers act with integrity and are open and co-operative with the regulators.”
10:49 AM BST
Impact of rate rises ‘still to come through’, says Bank of England chief economist
Inflation remains “too high” but the question of whether to raise interest rates further to steer price rises back to the Bank of England’s 2pc target has become “more finely balanced”, according to its chief economist.
Our economics editor Szu Ping Chan reports from the IMF and World Bank summit in Marrakech:
Echoing comments by his colleague Swati Dhingra, Huw Pill said the full impact of higher rates was yet to feed through to the economy.
Speaking at an event in Marrakech, he said: “Inflation has been too high, it remains too high. We need to return it to target. To do so, we have tightened monetary policy.
“We have done a lot over the last two years. A lot of that policy is still to come through. There is still policy transmission in the pipeline.
“Whether we’ve done enough or whether we have more to do I think is becoming a more finely balanced issue. But we will do what we need to do in order to have inflation at 2pc on a lasting basis.”
The Bank of England has lifted rates from 0.1pc in December 2021 to 5.25pc today.
Policymakers left rates on hold in September for the first time in 18 months at their latest meeting amid signs that inflation, which currently stands at 6.7pc, is coming down faster than expected.
10:36 AM BST
‘State actor’ could have been behind gas leak, says Finnish intelligence service
Gas prices have rallied further after the Finnish Security Intelligence Service said it cannot rule out the possibility a “state actor” was involved in damaging undersea pipelines.
UK contracts gained 6.5pc to 124.3p per therm, while Europe’s benchmark gained 7.2pc to near €50 per megawatt hour to both reach fresh six-month highs.
Nato ministers have sat down for talks about damage to the Balticconnector pipeline between Finland and Estonia.
Finland, which is investigating, said on Tuesday that the damage was probably caused by “outside activity”, renewing concern over regional energy security and pushing gas prices higher just over a year after the dramatic Nord Stream pipeline bombings.
10:11 AM BST
Oil gains as Saudi Arabia and Russia indicate further supply cuts
Oil prices have climbed after Saudi Arabia and Russia reaffirmed their close cooperation in the crude market with a public show of unity, and traders monitored events in Israel and Gaza.
Speaking in a joint interview on Russian state TV, Saudi Energy Minister Prince Abdulaziz bin Salman said producers will continue to act pre-emptively.
Russia’s Deputy Prime Minister Alexander Novak, meanwhile, said the market balance was fragile.
It comes after Vladimir Putin said on Wednesday the Opec+ cooperation on cuts to oil supplies was likely to continue.
Saudi Arabia has cut production by 1m barrels a day since the summer, while Russia limited exports by 300,000 barrels per day in a bid to shore up prices.
Brent crude, the international benchmark, has risen 0.9pc today toward $87 while US-produced West Texas Intermediate has gained 0.6pc to tip above $84.
09:53 AM BST
Ecclestone admits fraud over £400m overseas assets
Ex-Formula One boss Bernie Ecclestone has pleaded guilty to fraud at Southwark Crown Court after failing to declare more than £400 million of overseas assets to the Government.
The 92-year-old appeared at Southwark Crown Court and pleaded to one count of fraud by false representation, just over a month before he was due to stand trial.
09:42 AM BST
Economy trapped in low growth, high tax cycle, says Reeves
After the ONS figures showing the UK economy grew by 0.2pc in August, Labour shadow chancellor Rachel Reeves said:
Under the Conservatives, Britain’s economy remains trapped in a low growth, high tax cycle that is leaving working people worse off.
Labour will get our country building again so we can boost growth, make working people better off and get Britain’s future back.
09:26 AM BST
Pound drops back despite growing economy
The pound has fallen back slightly after official figures showed the UK economy grew in line with expectations in August, but shrank more than initially thought in July.
Sterling was down 0.1pc against the dollar on the day to $1.23.
Against the euro, sterling also lost 0.1pc to remain north of 86p.
09:10 AM BST
Global shocks becoming ‘new normal’ for world economy, warns IMF
Economic and financial shocks are becoming the “new normal” for the global economy as governments run out of fiscal firepower to fight crises, according to the head of the International Monetary Fund.
Our economics editor Szu Ping Chan has the latest from the IMF and World Bank summit in Morocco:
Kristalina Georgieva said: “We are experiencing severe shocks that are now becoming the new normal for a world that is weakened by weak growth and economic fragmentation.”
She also warned that central banks would have to keep interest rates higher for longer to keep a lid on inflation, dampening growth further.
“Inflation is down but still above target in many countries. So interest rates will have to remain higher for longer, throwing more cold water on already anaemic growth,” she said.
08:55 AM BST
FTSE 100 lifted higher by energy companies
The FTSE 100 hit its highest level in nearly two weeks as figures showed Britain’s economy returned to growth in August.
The UK’s blue-chip index has risen 0.3pc in early trading, while the domestically-focused FTSE 250 has gained less than 0.1pc.
The FTSE 100 was mainly pushed higher by energy companies, with BP adding 1.9pc and Shell up 0.8pc as the bloodshed in Israel raising concerns about stability of oil supplies from the Middle East, risking a rise in crude prices.
EasyJet shares have fallen 4.1pc despite the company announcing record summer profits and plans to buy 157 Airbus aircraft, with an option to add 100 more.
The Restaurant Group surged 37.1pc after it announced it has agreed a takeover by private equity giant Apollo for £506m in cash.
Money transfer firm Wise has gained 4.1pc after it raised its full-year income growth guidance on the back of higher interest rates.
08:32 AM BST
Wagamama owner agrees £701m private equity takeover
Wagamama owner The Restaurant Group is set to be taken private after agreeing a £701m takeover by private equity giant giant Apollo.
Apollo will pay 65p a share for The Restaurant Group (TRG), which marks a 34pc premium on the firm’s share price as of market close on Wednesday.
The deal values TRG shares at around £506m, or £701m including debts.
Apollo said it has “closely followed TRG over many years and believes that TRG is a high quality and leading company in the casual dining market with an attractive portfolio of concepts and brands and an experienced management team with a clear vision and strategy for the future direction of TRG”.
TRG said: “The TRG board believes the certain value represented by the cash acquisition is a superior outcome for TRG shareholders compared to continuing to pursue the independent strategy of TRG.”
It added it was “cognisant of the premium, certain value of the acquisition against the prevailing risk for all consumer-facing businesses with exposure to macro-economic uncertainties”.
08:14 AM BST
KPMG hit with record fine over Carillion collapse
Audit giant KPMG has been fined a total of £21m after a series of failures in its audit of collapsed outsourcer Carillion.
The Financial Reporting Council said that it had levelled a record fine on the business, saying that it had failed to adhere to “the most basic and fundamental audit concepts”.
Carillion, which employed around 12,000 people, collapsed in January 2018 with large debts on its books.
The penalty that KPMG will pay is on top of the £14.4m settlement with the FRC that was reached in May 2022 after its employees handed misleading information to the watchdog.
08:09 AM BST
UK still heading for recession, economists predict
Higher interest rates and a lack of momentum means Britain’s economy will still fall into recession at the end of this year despite the bounce back in August, economists predicted.
Ruth Gregory, deputy chief UK economist at Capital Economics, said: “Some of the strength of GDP in August was due to temporary factors and the timelier survey measures of activity point to a drop in real GDP in September.
“So we are sticking to our below-consensus forecast that the economy will shrink by 0.2pc quarter on quarter in both Q3 and Q4.”
Barret Kupelian, chief economist at PwC, said:
The overall trend of economic activity suggests that despite recent retrospective revisions to the national output, growth remains subdued.
GDP remains at levels experienced in February this year. Businesses and households are now feeling the effects of tighter monetary policy as well as a slowing global economy, particularly in some of the larger Eurozone economies that are our close trading partners.
With this in mind, it is possible that the third quarter GDP growth figures this year disappoint with economic activity flatlining, which will not be good news for the Chancellor ahead of the Autumn Statement in November.
08:07 AM BST
UK markets open higher
The FTSE 100 gained at the open after a move by China’s sovereign wealth fund to buy shares of the country’s largest banks, which boosted hopes for growth in the world’s second largest economy.
The UK’s blue chip index has gained 0.5pc to 7,657.19 while the domestically-focused FTSE 250 rose 0.2pc to 17,914.75 as ONS data showed the UK economy bounced back in August.
07:53 AM BST
UK continues to confound worst expectations, say analysts
After ONS figures showed the UK economy returned to growth in August, Neil Birrell, chief investment officer at asset manager Premier Miton, said:
After a poor July, the UK economy bounced back in August.
Like a number of other economies, the UK economy continues to confound not just the worst, but most expectations in remaining relatively robust.
The Fed has indicated it will proceed carefully on policy and the Bank of England must do the same as it balances the inflation versus growth equation.
Recessionary risk remains real, but the damage that could be done by ongoing high inflation is a threat.
Richard Carter, head of fixed interest research at Quilter Cheviot, added that the data “provides another small glimmer of hope that the UK could scrape through and avoid a recession”.
07:50 AM BST
Households could be hit with extra increase in energy bills
Britain’s energy watchdog has said it is considering a one-off increase to the energy price cap of up to £17 a year to help prevent suppliers going bust as they face spiralling bad debts.
Ofgem said it was launching a consultation on options to protect the energy market after figures in the summer showed that energy debt reached a record £2.6bn due to soaring wholesale prices and cost-of-living pressures on households.
It said it was considering a one-off increase in the energy price cap that could see households pay up to £17 a year more – or £1.50 a month – on average “to reduce the risk of energy firms going bust or leaving the market as a result of unrecoverable debt”.
The regulator is now consulting with the energy industry, consumers groups and the wider public to look at the options.
But it said, if approved, any increase to the cap would be delayed until next April to protect consumers from extra costs during the winter.
07:43 AM BST
BBC and ITV face competition investigation
The BBC and ITV are among seven television companies under investigation from regulators on suspicion of breaching competition laws.
The Competition and Markets Authority (CMA) said it has launched an investigation into the broadcasters – along with Hartswood Films, Hat Trick Productions, Red Planet Pictures, Sister Pictures and Tiger Aspect.
The regulator said it would examine how the companies purchase services from freelance providers, and the employment of staff, who support the production, creation and broadcasting of television content in the UK.
The CMA believes “it has reasonable grounds to suspect one or more breaches of competition law”.
It has also launched a separate investigation into suspected breaches in relation to sports content.
07:30 AM BST
EasyJet plans to buy more planes after record summer profits
EasyJet is proposing to order new aircraft and resume dividend payments to shareholders after making a record profit this summer.
The airline said it expects its profit before tax between July and September to be between £650m and £670m.
This was driven by an 8pc increase in passenger numbers and a 9c rise in fares, both compared with the same period last year.
The company revealed it has reached a proposed agreement with Airbus to order 157 aircraft and a further 100 purchase rights.
Chief executive Johan Lundgren said: “This will enable easyJet’s fleet modernisation and growth to continue beyond 2028 while providing substantial benefits including cost efficiencies and sustainability improvements.”
EasyJet said its profit before tax for the year to the end of September is expected to be between £440m and £460m.
07:22 AM BST
UK more resilient than expected, says Hunt
After the latest data showing the UK economy grew, Chancellor Jeremy Hunt said:
The UK has grown faster than France and Germany since the pandemic and today’s data shows the economy is more resilient than expected.
While this is a good sign, we still need to tackle inflation so we can unlock sustainable growth.
07:17 AM BST
Education returns to normal following teacher strikes
Ahead of this month’s recovery, Britain’s economy had shrunk by 0.6pc in July following strikes by teachers.
Darren Morgan, director of economic statistics at the ONS, said:
Our initial estimate suggests GDP grew a little in August, led by strong growth in services which was partially offset by falls in manufacturing and construction.
Within services, education returned to normal levels, while computer programmers and engineers both had strong months.
Across the last three months as a whole, the economy has grown modestly, led by car manufacturing and sales, and construction.
07:12 AM BST
Services recovery helps UK back into growth
The UK economy grew by 0.2pc in August from July, figures from the Office for National Statistics showed, following a significant improvement in the services sector.
The ONS revised down its gross domestic product (GDP) estimate for July, with output now seen to have fallen by 0.6pc versus an earlier estimate of a 0.5pc drop.
The economy was hit by heavy rain and strikes in July and the improvement in August could help to reduce the possibility of a recession.
Services output grew by 0.4pc in August following a fall of 0.6pc in July.
07:08 AM BST
Thanks for joining me. Britain’s economy returned to growth in August as the services sector bounced back into expansion.
The Office for National Statistics said the gross domestic product (GDP) grew by 0.2pc as had been predicted by economists.
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What happened overnight
Asian stocks extended the week’s gains, undeterred by forecast-beating US wholesale inflation data as investors grew increasingly hopeful the Federal Reserve would not hike interest rates further.
The mood was enhanced by news that China’s massive sovereign wealth fund had bought stakes in the country’s biggest banks, fuelling speculation it could broaden its reach to support beleaguered mainland markets.
Tokyo and Seoul rose by more than one percent, while Sydney, Singapore, Taipei and Jakarta were also on the front foot.
Hong Kong and Shanghai also rallied on news that China’s Central Huijin Investment – an arm of the $1.4trillion China Investment Corp – had bought $65m of shares in the country’s banking giants.
Analysts said the purchase of stakes in Bank of China, Agricultural Bank of China, China Construction Bank and Industrial and Commercial Bank of China was aimed at boosting sentiment in mainland markets, which have been hit by worries over the stuttering economy.
Huijin was also said to be planning to further boost its holdings.
There has been plenty of optimism on trading floors in recent days after a US jobs report Friday was neither too hot nor too weak, while a string of central bank decision-makers have lined up to suggest they backed a pause in any more monetary tightening.
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