Ofgem calls for inquiry into Big Six energy suppliers
European stock markets drift lower11.03am GMT
In an attempt to tackle risky mortgage lending, the Bank of England has urged banks to consider the risk of future spikes in interest rates when approving mortgages. The central bank is readying tools to rein in overly risky lending.
House prices have climbed around 10% across Britain over the past year, and the Bank said mortgages were higher as a share of income than at any point since 2005, in a statement published this morning following last week's meeting of its financial policy committee.
In a continuation of a longer-term trend, mortgages at loan-to-income ratios above four times accounted for a higher share of new mortgages in the third quarter of 2013 than at any time since the data series began in 2005. New mortgage lending at high loan-to-value ratios remained low by historical standards, though the number of mortgage products offering higher loan-to-value ratios had doubled over the previous six months.
Given the increasing momentum, the FPC will remain vigilant to emerging vulnerabilities, will continue to monitor conditions closely and will take further proportionate and graduated action if warranted.
10.50am GMT
If in doubt turn to Russia for a market catalyst, says Nick Dale-Lace, senior sales trader at CMC Markets.
Forceful rhetoric from Obama overnight regarding Putin and Russia has taken the wind out of European equity markets sails as the two day rally comes to an abrupt end. In a market clearly lacking in conviction for where to go next we again turn to the situation in Russia to provide a catalyst for market direction as we seem to have done repeatedly over the past few weeks. Retail sales figures this morning failed to move the market and we now hope that this afternoons GDP numbers from the US will provide some concrete economic data on which to base genuine market valuations and hence give traders something on which to hang their bullish or bearish coats.
After a stellar 2013 Hennes & Mauritz, the second biggest fashion retailer in the world is 4% lower this morning on news of weaker than expected first quarter profits. This was blamed on both the general retail environment they find themselves in which is proving to be particularly challenging with the worlds current economic situation as well as a recent increase in business investment with online service development being a major area of spend. This was eased with news of a 12% increase in sales for March and a continuation of market share gains.
10.48am GMT
It's not just Greece that's on strike. Germany's main airports have been hit by a strike as public sector workers upped the ante in their pay dispute with the government. Frankfurt and Munich are among those affected. Lufthansa cancelled a third of flights scheduled for today, including almost all domestic and European short-haul flights during the strike period until 1300 GMT.
The walkout is part of wider action that also includes local transport staff and child carers. Trade unions are demanding pay rises of 3.5% plus an extra 100 per month for 2.1 million federal and municipal public sector workers, which would take the total increase to 6.7%.
9.58am GMT
Alan Clarke at Scotiabank says "UK retail sales are "flying".
The breakdown is volatile from one month to the next. But one thing that comes across loud and clear is that components related to the housing market are doing very well indeed.
For example, department store sales are up almost 6% y/y. The rather obscure 'other non-food' component is up 10% y/y. Internet sales are back up to 20% y/y.
9.56am GMT
Over on our Realitycheck pages, my colleague Juliette Jowit has looked at whether the investigation into the Big Six energy suppliers could cause blackouts.
An official investigation into over-charging customers for gas and electricity raised an "increasing risk" of blackouts, claims Sam Laidlaw, chief executive of the UK's biggest gas supplier, Centrica . Really?
9.51am GMT
Here's more on the IMF bailout for Ukraine, courtesy of Reuters. The $14-18bn loan agreement is intended to help Ukraine meet debt payments looming this year after months of anti-government protests which resulted in the overthrow of President Viktor Yanukovych and a standoff with Moscow in which Russia annexed the Crimea region.
The mission has reached a staff-level agreement with the authorities of Ukraine on an economic reform programme that can be supported by a two-year stand-by arrangement with the IMF," the IMF said in a statement.
The financial support from the broader international community that the programme will unlock amounts to $27bn over the next two years. Of this, assistance from the IMF will range between $14-18bn, with the precise amount to be determined once all bilateral and multilateral support is accounted for.
9.49am GMT
Returning to the strong UK retail sales numbers which took analysts by surprise, Keith Richardson, managing director of the retail sector at Lloyds Bank Commercial Banking, said:
These figures are welcome news for retailers, particularly when viewed against the backdrop of the extreme weather conditions that affected large parts of the country during February. They suggest that consumer confidence is heading in the right direction and the sector is benefiting from an improved outlook.
Looking further ahead, price cuts particularly in the grocery sector, will benefit consumers in future months, although this will impact upon margins for both retailers and their suppliers. Retailers will look to the arrival of spring as a further opportunity to maintain positive momentum.
9.45am GMT
More Ofgem reaction. How many more winters before bills come down? asks Henry de Zoete, former government adviser and co-founder of ThisIsTheBigDeal.com.
All this decision does is push the issue further down the road. It will take years to report, and even longer to implement. Meanwhile, the energy companies will be delighted to continue business as usual. But when energy bills have doubled people need help now.
How many more winters before bills come down? The only way for people to challenge the Big Six and get cheaper energy bills now is to group together. Theres power in numbers.
9.31am GMT
Just out: UK retail sales jumped 1.7% last month, following January's 2% drop over three times as much as expected. Sales volumes were up 1.6% in the three months to February, the highest since August. Supermarkets and other food stores contributed more than half of the growth in February.
9.17am GMT
James Padmore, head of energy at comparethemarket.com, said:
When it comes to energy bills, clarity is king. Although Ofgem highlights the lack of switching, its reforms being introduced next week will actually help people to change energy suppliers more easily. From next week, energy bills must display tariff information in a clear and consistent manner, which will help consumers make quick comparisons. Switching must be a part of the solution to the current high energy prices it is a healthy part of a functioning competitive marketplace and the process should be made as easy as possible for consumers. The market is clearly not working entirely in the consumer's favour, which is why 43% of consumers do not trust the transparency of energy suppliers.
Putting energy companies under the spotlight over what could be a two year review period will likely encourage them to get ahead of the game. Expect to see an increasing number of companies announce price freezes following in the footsteps of SSE - in order to retain customers and win consumer and regulatory trust. The energy price hikes of some companies in an uncompetitive market are clearly evidenced by the money people can save by switching providers in many cases comfortably around £350 a year. For a family of four this could pay for roughly a year and a halfs broadband.
8.52am GMT
More reaction to the energy competition investigation.
Ann Robinson, director of consumer policy at uSwitch.com, welcomed it but said that it would take at least 18 months before any proposals come out of the probe.
It is clear from the evidence we have seen that competition is not working well enough and it is absolutely essential that, in order for consumers to benefit from competition, we obtain a greater level of engagement. Competition is working well in the supermarket sector why cant it work as well for energy?
We also look forward to the launch of Ofgems consumer engagement campaign. Many of us lack both the information and the confidence to participate in this market. We need a simple, straight talking education programme that enables consumers to make the market work for them.
8.48am GMT
The London Stock Exchange said this morning that money raised on its markets surged 91% in the 11 months to the end of February and there was more in the pipeline. Equity capital raised jumped to £28.3bn from £14.8bn, with 162 stock market flotations against 107 a year earlier.
8.40am GMT
The European recovery rally has come to a halt following Wall Street's weak finish last night. Main stock markets are down between 0.4% and 0.5%. Swedish clothing chain Hennes & Mauritz the world's second-biggest fashion retailer after Spain's Inditex disappointed with results that fell well short of analysts' forecasts, triggering a 3.8% drop in the share price.
8.19am GMT
Meanwhile, the International Monetary Fund has agreed a $14-18bn stand-by agreement with Ukraine, a deal that will unlock further loans to reach a total of $27bn over the next two years.
In a sign that the Ukraine crisis is affecting some businesses, Eurasia Drilling Russia's biggest oilfield services company said it expects a fall in 2014 revenues due to the weaker rouble (as well as Rosneft's decision to develop its own servicing business).
8.16am GMT
In London, shares in SSE and British Gas owner Centrica fell after Ofgem, the energy regulator, asked the Competition and Markets Authority to investigate the Big Six energy suppliers. SSE lost 1% while Centrica slipped 0.6%. The watchdog wants to settle 'once and for all' whether the companies' profit rises are due to barriers preventing competition
More on the story here.
We must have an energy market in this country that can attract the £110bn of investment needed over the coming years to secure and transform our power supply, while ensuring bills are manageable for both households and businesses.
An inquiry provides an opportunity to resolve the current debate and win back some much-needed confidence in the market. To achieve this, it is vital that the CMA is able to get on with its job swiftly, free from political interference.
8.11am GMT
The FTSE 100 index in London has tumbled some 30 points, or 0.4%, to 6574, while Germany's Dax, France's CAC, Italy's FTSE MIB and Spain's Ibex all slipped 0.2% in early trading.
7.53am GMT
The main focus this morning is UK retail sales for February, which are likely to have bounced back after January's 1.5% slump. City economists have pencilled in a 0.5% rise there was lots of heavy discounting that month which should have boosted sales volumes but the bad weather makes it a tad hard to forecast.
This morning also brings the statement from the Bank of Englands March Financial Policy Committee meeting.
7.52am GMT
Equity market calls from Michael Hewson, chief market analyst at CMC Markets UK:
FTSE100 is expected to open 30 points lower at 6,575
7.46am GMT
Good morning, and welcome to our rolling coverage of the financial markets, the world economy, the eurozone and business.
It looks like the rally enjoyed by European shares in recent days is over, with markets expected to track Wall Street's dip last night, where tech stocks such as Facebook and King Digital Entertainment plummeted.
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