The European Central Bank and Bank of England both announce policy decisions today, on the back of weak German industrial output and Italys slide back into recession. 10.28am BST Heres the guardians story on Russias import ban. 10.19am BST Some quotes from Dmitry Medvedevs press conference, when he announced the ban on food imports from the west. He said: There is nothing good in sanctions and it was not an easy decision to take, but we had to do it.It doesnt mean that theyll be adopted, but they are on the table. 10.10am BST Greek unemployment eased slightly in May but it is still shockingly high. The countrys statistics agency said the jobless rate inched down to 27.2% from 27.3% in April. That is more than double the eurozone average of 11.6% in May. Joblessness remains a major issue in Greece, despite signs of recovery in the economy, which is expected to emerge from recession this year. 10.05am BST Companies are starting to feel the effects of the Russian turmoil. The worlds number two bottler of Coca-Cola drinks warned volumes would fall for the rest of the year, citing a sudden deterioration in Russia, its biggest market. It said volumes fell by a low single digit percentage in the second quarter, the first decline in 11 quarters, saying the escalation of the crisis in Russia and Ukraine had affected consumer spending in the region. 9.48am BST Medvedevs announcement confirms Putins comments yesterday, covered in my colleague Jennifer Rankins story. She writes:Vladimir Putin has banned the import of agricultural goods from countries that have imposed sanctions on Russia in a tit-for-tat move that deepens the economic standoff between the Kremlin and the west.In tacit recognition that Russian consumers will bear the cost of the import ban, the decree also instructs officials to come up with measures to stabilise commodity markets and prevent food price rises. 9.39am BST 9.38am BST 9.38am BST These bans from Russia will start from today and will last a year. 9.34am BST Russia will ban transit flights for Ukranian airlines via its territory. It is also mulling a ban of transit flights for EU, US airlines to Asia-Pacific reigons. 9.33am BST There are lines coming through on the wires on Russias retaliatory measures to sanctions. Prime Minister Dmitry Medvedev says Russia will ban fruit, vegetable meat, fish, milk and dairy imports for the US, EU, Australia, Canada and Norway. 9.23am BST Adidas, the worlds second-biggest sportswear firm, cut its profit for 2014, saying it would increase spending on marketing and an expansion of its own-run stores a week after it issued a profit warning.Chief executive Herbert Hainer said: Missing our goals is something we take very seriously and we definitely reflect critically on. 9.08am BST Rates are expected to be kept on hold at 0.5% when the Bank of England announces its policy decision at 12 noon. Samuel Tombs at Capital Economics says:Although the Monetary Policy Committee (MPC) appears to have edged closer to raising interest rates over the last few months, it would still be a major shock if it raised them at its meeting today. And while the strength of the latest activity surveys suggests that the minutes later in the month may show that the vote was split for the first time since July 2011, the recent fading of momentum in house prices, downward trend in inflation and sluggish pay growth all suggest that the MPC will probably still wait until early next year to raise rates. 8.36am BST Markets are looking more stable this morning after yesterdays rout. 8.33am BST Christian Schulz at Berenberg bank says Putin, not inflation, is the real issue at todays ECB meeting. Another major escalation of the troubles in eastern Ukraine could spread the negative confidence effect from core European exporters to the wider economy. If Russian tanks roll westwards into Ukraine, the so-far shielded consumer confidence could take a hit even in far-away Iberia. The ECB will stand ready to act decisively in such circumstances, even deploying quantitative easing as a last resort. So far, however, Putins impact on the Eurozone has been mild. 8.29am BST The ECB, which has in the past cancelled its August meeting, is not expected to make any major announcements today. Draghi certainly has some explaining to do why euro area inflation saw yet another dip in July to a new 4½-year low of 0.4%. While the technical answer is known (base effects from energy prices), the ECBs repeated overestimating of the inflation path this year may be starting to harm its credibility. But it is far too soon for the ECB to even consider a policy change, given that the latest flagship initiative TLTROs only starts next month. So the Governing Council will stick to their guns and simply hope for the best. 8.22am BST In the UK, insurance groups Aviva and RSA have posted upbeat results, amid efforts to turn their businesses around. My colleague Julia Kollewe reports:Britains largest general insurer Aviva made an operating profit of £1.1bn in the first six months of the year, up 4%. Overall new business climbed 9% to £453m, although the company reported a 41% reduction in the value of new business from annuities in the UK following the sweeping pension reforms announced in the March Budget. The chancellor scrapped rules that force pensioners to buy an annuity. We suspect there are further falls to come, said Eamonn Flanagan, analyst at Shore Capital.Aviva boss Mark Wilson said: Aviva remains a work in progress, and these results are a step in the right direction. The company reduced debt and made more cost savings.Under Stephen Hester, the former Royal Bank of Scotland boss, rival RSA moved back into the black in the first half with a £69m pretax profit, against a £250m loss a year ago. Hester plans to resume dividend payments at the full year after scrapping payouts in February.Hester took the helm in February after Simon Lee quit in December in the wake of three profit warnings and an accounting scandal in Ireland. Hester took immediate action, tapping shareholders for cash in a £775m rights issue while also raising over £600m from selling assets in eastern Europe, Canada and China. 8.16am BST Theres better corporate news out of Germany this morning. Commerzbank said net profit more than doubled in the second quarter, boosted by a stronger performance at its retail unit and lower overall loan-loss provisions.Germanys second biggest bank said it would speed up the clean up of unwanted assets to support the turnaround of the bank, which was bailed out of the financial crisis by the Germany government. 8.03am BST The weak German data (see below) suggest the eurozones largest economy stagnated or possibly shrank in the second quarter, say economists. Carsten Brzeski of ING Bank blames the slowdown on domestic problems, rather than the crisis in Ukraine. Contrary to often voiced views that the German economy has suffered severely from the ongoing geopolitical tensions, the probable stagnation was rather home-made. Particularly, the construction sector has become a drag on growth. The expected downturn after the weather-driven boom in the first quarter has been worse than expected. The domestic fundamentals of the German economy remain sound and with the expected growth acceleration in the US and the UK at least some major trade partners could keep the German export engine running. However, recent data was a strong reminder that islands of happiness only exist in books and not in economic reality. 7.54am BST This morning, weve already had weak data out of Germany, fuelling fears that the industrial recovery in the eurozones biggest economy is running out of steam.Industrial output rose just 0.3% from May. While that is the first increase in four months, economists were targeting a rise of 1.3%. Bloomberg reports:The European Union agreed last week on its widest-ranging sanctions yet over Russias backing of rebels in eastern Ukraine and the Bundesbank has cited geopolitical tensions as contributing to a probable stagnation of the economy in the second quarter. Factory orders fell the most in more than 2 1/2 years in June and sentiment surveys have plunged in Germany, Russias biggest trading partner in Europe.Its still too early to say that tensions with Russia are already weighing on hard data, said Andreas Rees, chief German economist at UniCredit MIB in Frankfurt. But psychological headwinds are increasing and we have to see whether this pessimism will become persistent. 7.40am BST Over night, it emerged that Bank of America may have agreed to pay what would be the largest settlement with the US justice department as a result of the financial crisis. AP reports: Bank of America has tentatively agreed to pay between $16bn and $17bn to settle an investigation into its sale of mortgage-backed securities before the financial crisis, a source directly familiar with the matter said on Wednesday.The deal with the bank, which must still be finalised, would be the largest Justice Department settlement by far arising from the economic meltdown. It follows earlier multibillion-dollar agreements reached in the last year with Citigroup and JP Morgan Chase. 7.34am BST The European Central Bank holds its monthly press conference today against the backdrop of a worsening economic climate in the eurozone and rising tensions with Russia. ECB president Mario Draghi is not expected to announce any change in policy, given that the new stimulus announced last month has not even started yet. But, as Michael Hewson of CMC Markets, notes:Markets will be paying close attention to the press conference and in particular the ECB Presidents views on what negative effects the situation in Ukraine is likely to have on the ECBs economic forecasts for the euro area. Continue reading...
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