ECB chief Mario Draghi could cut inflation forecasts and hint at further stimulus measures when he faces the press later today * Latest: Eurozone PMIs show stronger private sector growth * Introduction: It’s European Central bank decision day * Asia recovers..... * .... China holds a parade 9.38am BST WHILE EUROPE PICKS UP PACE, BRITAIN’S SERVICE SECTOR GROWTH HAS SLOWED TO ITS SLOWEST RATE IN 27 MONTHS. The UK services PMI dipped to 55.6 in August, from 57.4, suggesting the recovery weakened last month. UK PMI Services: 27-month low. Slowest rise in new business since Apr 2013. Input price inflation eases for 3rd straight month 9.29am BST EUROPEAN INVESTORS ARE CHEERING THE SURGE IN EUROZONE PRIVATE SECTOR GROWTH LAST MONTH. The FTSE 100 is now up by 103 points, or 1.7%, while Germany’s DAX is 1.8% higher. IHS believes that the Eurozone should be able to achieve reasonable, if unspectacular growth over the coming months – although the threat to global growth that could come from a marked Chinese slowdown clearly poses a downside risk. 9.19am BST The increase in eurozone private sector growth means even less chance that the ECB will announce new stimulus measures today. So argues Bloomberg economist Maxime Sbaihi, who predicts plenty of questions about China at this afternoon’s press conference: CHART: Euro-area #PMI at new 4y high in August. No summer break for the recovery -> No #ECB policy change today. pic.twitter.com/HHHbvvlw6U It's #ECB day again and a different (external) world than last meeting (July 16). #Draghi will have more questions on China than #Greece... 9.11am BST DESPITE THE SLOWDOWN IN FRANCE, THE EUROZONE’S PRIVATE SECTOR IS GROWING AT ITS FASTEST RATE IN FOUR YEARS. Data firm Markit just released its Eurozone composite PMI, and it shows that output expanded more quickly in August. “Although global economic worries have intensified in recent weeks, the calming of Grexit fears has led to an improvement in the business environment across the eurozone, pushing the pace of economic growth to its fastest for just over four years in August. The PMI is indicating euro area GDP growth close to 0.4% in the third quarter, a solid albeit unspectacular rate of expansion. “The upturn was stronger than recorded by the flash reading, thanks mainly to stronger growth in Germany and the best performance for over four years in Italy, where the PMIs are both pointing to 0.5% GDP growth in the third quarter. But it is Spain that remains the star performer among the largest eurozone countries, with the PMI signalling another 1.0% GDP growth spurt in the third quarter. In summary, Spain, Italy and Germany all beat expectations for Services PMI's. France slips back #euro 8.59am BST NOT FOR THE FIRST TIME (OR THE LAST, I FEAR), GERMANY’S ECONOMY HAS OUTPERFORMED FRANCE. The German service sector PMI rose to 54.9 last month, from 53.8 in July, indicating faster growth. 8.55am BST Less encouragingly, France’s service sector came off the boil last month and only reported modest growth: France Services PMI (Aug) falls back to 50.6, down from 51.8 8.52am BST NOW THIS IS ENCOURAGING -- ITALY’S SERVICE SECTOR JUST GREW AT THE FASTEST PACE SINCE THE EARLY DAYS OF THE FINANCIAL CRISIS. Service sector activity growth in #Italy fastest in almost five-and-a-half years in August. Headline index at 54.6 http://t.co/yuYYk2FmaU 8.42am BST SWEDEN’S CENTRAL BANK HAS RESISTED THE TEMPTATION TO CUT BORROWING COSTS TO FRESH RECORD LOWS. The Riksbank left benchmark interest rates unchanged at minus 0.35%, but did hint that it could do more, saying: “The Riksbank remains highly prepared to make monetary policy even more expansionary in the event of inflation prospects deteriorating.” #Swedish Central Bank leaves rate unchanged,but cuts inflation outlook& says room more QE...almost exactly what expected from @ecb later 8.40am BST Budget airline easyJet is leading the FTSE 100 risers in London. Shares surged by almost 7%, after raising its profit forecasts and reporting record traffic levels in August. 8.36am BST UP WE GO AGAIN! EUROPEAN STOCK MARKETS HAVE JUMPED AT THE START OF TRADING, AS INVESTORS PILE INTO SHARES AHEAD OF THE ECB MEETING. The FTSE 100 leapt by 86 points, or nearly 1.5%, with traders anticipating that Mario Draghi may suggest new stimulus moves at this afternoon’s press conference in Frankfurt. 8.31am BST SPAIN’S SERVICES COMPANIES HAVE POSTED ANOTHER MONTH OF SOLID GROWTH, AS ITS ECONOMY CONTINUES TO RECOVER. The Spanish Services PMI came in at 59.6 in August, down very slightly on July’s 59.7 but still a strong result (any reading over 50 shows growth). Measures of new business and job creation remained robust too. 8.20am BST OVERNIGHT, THE INTERNATIONAL MONETARY FUND HAS WARNED THAT THE DOWNSIDE RISKS TO GLOBAL GROWTH HAVE RISEN, PARTLY DUE TO THE SLOWDOWN IN CHINA. In a new report, ahead of the G20 finance ministers meeting in Ankara this weekend, the Fund said: Near-term downside risks for emerging economies have increased, given the combination of China’s growth transition, lower commodity prices, potential adverse corporate balance sheet and funding challenges related to a dollar appreciation, and capital flow reversals and disruptive asset price shifts. Risks to growth include financial market volatility, declining commodity prices & depreciating EMs currencies. #G20 http://t.co/sHBUAx62c0 Related: IMF: China slowdown could keep global interest rates low 8.13am BST MOST MORNINGS RECENTLY, WE’VE BEEN GLUED TO THE TWISTS AND TURNS ON THE CHINESE STOCK MARKET. NOT TODAY, THOUGH. The Shanghai index is closed until Monday, so Beijing could hold a parade to mark its victory over Japan and the end of the second world war. And what an event it was, with masses of tanks, planes and troops on display. For the Brits Ken Clarke has turned up. Didn't seem overly keen to have the official photo. pic.twitter.com/nyum4nUE1n Related: China military parade commemorates second world war victory – as it happened Xi, Putin aaaand Jiang Zemin out on balcony. Big gasp for last guy pic.twitter.com/V6Pcau9d8D If you think you're melting imagine these guys... pic.twitter.com/33uUpcCkE1 Tanks rolling into Tiananmen pic.twitter.com/IokDotmPXx 7.54am BST AFTER SOME TOUGH DAYS, ASIA’S MARKETS ARE STAGING A MODEST RECOVERY TODAY. Japan’s Nikkei jumped by 0.7%, following three days of losses, and there are also gains in South Korea and India. In the face of poor growth prospects in Japan, banks aggressively began lending to emerging Asian nations. With the massive falls seen in emerging market currencies over the past twelve months or so, defaults on these loans have been soaring. This is likely to be a major headwind to the performance of the Nikkei over the coming months as well. 7.36am BST GOOD MORNING, AND WELCOME TO OUR ROLLING COVERAGE OF THE WORLD ECONOMY, THE FINANCIAL MARKETS, THE EUROZONE AND BUSINESS. Investors will be looking to ECB President Draghi for more supportive comments later today. Our European opening calls: $FTSE 6130 up 47 $DAX 10134 up 86 $CAC 4590 up 35 $IBEX 10027 up 89 $MIB 21765 up 153 Continue reading...
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