Slowdown in car manufacturing blamed as US industrial output misses forecasts

5.49pm BST

And finally, another business leader has entered the debate on Scottish independence.

The head of Aviva, Mark Wilson, is the latest to flag up concerns over Thursdays referendum, telling the BBCs Kamal Ahmed that hes worried that infrastructure funding (building of schools, hospitals and roads) could become more expensive.:

Other commentators have pointed out the challenges that the Scottish financial system will face in the event of a yes vote

Aviva is a long-standing investor in Scottish infrastructure and we will maintain our commitment.

Cameron tells Scots: "If you don’t like me I won’t be here forever, if you don’t like this govt, it won’t be here forever" #scotRef

"I understand why it might be appealing to vote yes.. But when something looks too good to be true that’s because it is" PM

5.08pm BST

European stock markets ended the day pretty calmly, as investors prepare for drama later this week.

European Markets (close) FTSE 6804.21 -2.75 -0.04% DAX 9659.63 8.50 0.09% CAC 40 4428.63 -13.07 -0.29% STOXX600 343.78 -0.49 -0.14%

Trading in Europe has been mixed today with M&A speculation amongst brewers mixing in with fears over a slowdown in China which added to a general uncertainty heading into the Scottish referendum and this months Fed meeting.

4.11pm BST

OK, time to recap the key points.

1) The OECD cast a shadow over the global economy by cutting its growth forecasts for most major countries today.

The global economy is expanding unevenly, and at only a moderate rate. Trade growth therefore remains sluggish and labour market conditions in the main advanced economies are improving only gradually, with far too many people still unable to find good jobs worldwide.

The continued failure to generate strong, balanced and inclusive growth underlines the urgency of undertaking ambitious reforms.

Extroardinary letter from an entrepreneur who just became a billionaire. http://t.co/swaHrpncMu

3.46pm BST

Heres Associated Presss take on the US factory data:

3.15pm BST

Capital Economics agrees that we shouldnt panic, saying:

The fall in industrial production in August was just due to problems seasonally adjusting autos production and is therefore not a sign that the recovery is running out of steam.

The more upbeat survey evidence emphasises that industry remains healthy.

3.07pm BST

Rob Carnell of ING reckons we shouldnt get too alarmed by the unexpected drop in US industrial production last month.

He reckons its a rogue reading, partly due to a seasonal slowdown in the automobile industry.

A 0.1% month-on-month decline in US manufacturing production in August and a 0.4%mom decline in manufacturing in particular, are at complete odds with survey evidence and almost certainly an aberration that either reflects payback from the 0.7%mom manufacturing gain in July, poor seasonal adjustment (seasonal auto shutdowns in July may be being over-adjusted in July and weighing on the August numbers), statistical noise, or a bit of all of the above.

2.58pm BST

The polls show its neck-and-neck, but the feeling in the City is still that the Better Together side will win Thursdays Scottish referendum:

Straw poll of just under 200 IG clients (small sample) this morning. 88% think No will swing it.

2.55pm BST

Heres our news story on the speculation that SABMiller could be a takeover target (see 12.34pm onwards for details)

2.19pm BST

What were we saying about the US recovery looking solid?

Industrial output across the entire American economy fell by 0.1% in August, the first monthly drop since January 2014, according to data just released.

U.S. Aug Manufacturing Output -0.4 Pct, First Decline Since Jan 2014, (cons +0.3 Pct) Vs July +0.7 Pct (prev +1.0 Pct)

Autos main drag as motor vehicle output -7.6% lower pulling overall man output down by 0.4%. Excluding autos, man output was 0.1% higher.

2.12pm BST

More takeover news: Microsoft has just announced the acquisition of Mojang, the Stockholm-based software firm, for $2.5bn.

Great acquisition. Minesweeper is going to be huge. RT @zerohedge: MICROSOFT TO BUY MOJANG FOR ABOUT $2.5 BLN

2.00pm BST

Analysts at Grupo Santander also reckon merger fever is alike in the brewing sector, triggered by SAB Millerss failed attempt to merge with Heineken:

If the wheels were not yet in motion on another brewing mega-deal, they may be now as SABMiller may have thrown down the gauntlet.

1.57pm BST

Phones 4us 500 stores are shuttered today, after the company took the shock decision to call in administrators after the loss of its contract with mobile operator EE left it unable to serve customers.

At at least one branch, staff have pinned the customer message that is also displayed on its website today.

Getting reports that customers unable to get through on any of the #Phones4U helplines listed on website. Bitter irony

1.49pm BST

Another sign that the US recovery remains solid — the Empire manufacturing survey, produced by the New York Federal Reserve, has bounced back this month to a near five-year high.

The Empire survey, which takes the temperature of factories in the New York area, jumped to +27.54, up from +14.69 in August. Any reading above zero suggests conditions have improved.

Sep NY #Fed Empire survey rises to 27.4 from 14.7, highest reading since October 2009. This reinforces underlying strength in manufacturing.

New YOrk area manufacturers appear to be experiencing some pricing power. pic.twitter.com/zDjQtZNRX8

1.33pm BST

SABMiller and Anheuser-Busch InBev may not be household names, but between them they own many of the worlds biggest beer brands.

1.25pm BST

Shares in SABMiller jump 12% on a @WSJ report that AB InBev is lining up financing for a bid: http://t.co/uqvpWaqigC pic.twitter.com/tRk5pYhHWz

1.06pm BST

City traders have been anticipating a takeover battle in the brewing sector since it emerged last night that SABMiller had made an unsuccessful bid for Heineken.

Alastair McCaig, market analyst at IG, says:

Over the weekend we have seen SAB Miller rebuffed in its attempts to woe Heineken, with the Danish brewers major shareholder preferring to remain independent.

If the M&A activity witnessed in the pharmaceutical sector this year is anything to go by then this will not be the last we hear about this.

12.46pm BST

Its early days, but if Anheuser-Busch InBev do launch a bid for SABMiller then wed be looking at one of the biggest takeover offers ever.

Before todays 12% surge, SAB will valued at almost £55bn. The WSJ reports that AB are talking to banks about a possible £75bn offer — thats £6bn more than Pfizers recent failed bid for AstraZeneca.

A potential $122bn deal! Woah. RT @WSJbreakingnews: AB InBev talking to banks about financing to buy SABMiller. http://t.co/ypO4fKeSt4

12.34pm BST

Shares in SABMiller have extended their earlier gains, now up 12% today as takeover speculation swirls through the brewing sector.

They surged a few minute ago, after the Wall Street Journal reported that Anheuser-Busch InBev, the worlds biggest brewer, was looking into getting financing for a bid for SAB.

Anheuser-Busch InBev is talking to banks about financing what could be a roughly £75 billion ($122 billion) deal to buy global beer rival SABMiller, according to a person familiar with the matter.

A tie-up between the worlds two largest brewing companies has been rumored for years, but a revival in global merger activity this year has sparked renewed speculation about a deal. AB InBev isnt in active discussions with SABMiller, said the person, explaining the company is waiting to line up its financing before making a formal approach….

Bar talks MT @WSJ: Breaking: AB InBev talking to banks about financing deal to buy SABMiller http://t.co/coKpz1pSAh

12.21pm BST

Speaking of the eurozone, Fathom Consulting have predicted that the European Central Bank will launch a full-blown quantitative easing stimulus scheme by the end of this year.

One factor is the falling oil price (it hit a 27-month low this morning), which will push inflation lower.

Earlier this month the ECB pulled out a small bazooka, announcing a 10 basis point cut in all three policy rates of interest, and setting out a programme of ABS and covered bond purchases. We view the latter as a staging post on the path to full-blown QE, which would involve the use of Central Bank money to buy government bonds, and Bunds in particular.

Mr Draghis announcement has affected our exchange rate forecasts, with the euro weaker through the remainder of this year than we had thought likely one month ago. But the consequences for euro area inflation are more than offset by falling energy costs.

We see euro area inflation hitting 0.0% by the end of the year. On our central view, this prompts the ECB to ramp up the purchase programme announced earlier this month to include purchases of sovereign debt. This brings about a meaningful depreciation of the euro, avoiding a prolonged period of deflation for now.

12.01pm BST

Heres Katie Allen on todays OECD report (highlights and charts start here):

The global economy faces headwinds from a sluggish eurozone and rising political tensions, including the uncertain outcome of Scotlands independence referendum, a leading thinktank has warned.

The Organisation for Economic Co-operation and Development (OECD) has slashed its growth forecasts for advanced economies and called on the European Central Bank to use quantitative easing to shore up the eurozone.

11.23am BST

Euro area international trade in goods surplus 21 bn July 2014, +2 bn for #EU http://t.co/aNyxWMpS0P @EU_Eurostat pic.twitter.com/Bvwz56gt0s

11.03am BST

Back in the eurozone, new data shows that the regions trade surplus has swelled again, but there are signs that exports may be weakening.

Eurozone exports rose by 3% year-on-year in July, Eurostat reports, while imports only increased by 1%. This pushed the trade surplus to 21.2bn, up from 18bn in July 2013.

The seasonally-adjusted July trade data do little for hopes that net trade will do much to help the Eurozone return to growth in the third quarter after GDP only stagnated in the second quarter.

In fact, the July data suggests that there is a risk that net trade could actually be negative in the third quarter and hold back Eurozone GDP growth.

10.30am BST

And if that wasnt enough, the OECD is also worried that that global investors are too upbeat:

The bullishness of financial markets appears at odds with the intensification of several significant risks.

A number of equity markets are reaching record highs, sovereign bond yields in several countries are near all-time lows and implied share price volatility in the United States and Europe is around pre-crisis levels.

10.28am BST

The OECD has also cited the Scottish referendum as one of several key risks that could hit the global economy.

Heres the list of risks highlighted in todays update from the Paris-based thinktank:

10.19am BST

The OECD is pretty blunt about the eurozones problems:

The recovery in the euro area has remained disappointing, notably in the largest countries: Germany, France and Italy. Confidence is again weakening, and the anaemic state of demand is reflected in the decline in inflation, which is near zero in the zone as a whole and negative in several countries.

While the resumption in growth in some periphery economies is encouraging, a number of these countries still face significant structural and fiscal challenges, together with a legacy of high debt.

The euro area needs more vigorous monetary stimulus, whereas the United States and the United Kingdom are moving to the end of their unconventional monetary easing.

10.04am BST

Breaking: The OECD has issued a new warning about weak demand in the euro area holding back the global recovery, and cut its growth forecasts for major economies.

The organisation has cut its global growth forecasts for most major economies, slashing its eurozone prediction from 1.2% to just 0.8%.

The tepid rate of growth means that a substantial degree of labour market slack remains, especially in the euro area, and world trade growth remains sluggish. Global growth should be somewhat more vigorous in the second half of 2014 and into 2015 given continued policy support, favourable financial conditions and growing confidence, alongside rising employment.

The recovery in the United States is solid, and growth is around trend in Japan and China and strengthening in India after the recent weak patch. By contrast, growth in the euro area looks set to remain subdued in the near term and Brazil is expected to make only a slow recovery from recession.

9.53am BST

In four days time, well know whether Scotland has taken the historic, dramatic step of voting for independence.

Amid the uncertainty over the UKs future, the pound is jittery this morning, down around a tenth of a cent at $1.625.

The economic consequences of a Yes vote are still unclear, with uncertainty over currency predicted, though certainly weaker prospects for certain industries.

As the three main UK parties and the Bank of England have all ruled out a currency union, Scotland would have to choose between a new Scottish pound, the euro, and unilateral adoption of the UK pound, where both of the latter two options would mean having no monetary independence. Scotlands financial services industry would see a very negative outcome, with large numbers of job losses.

Sterling nervous as tight Scottish independence referendum looms http://t.co/zfXdSFi9or #indyref pic.twitter.com/N3BVhSlVML

9.51am BST

John Caudwell, the billionaire founder of Phones 4u, has blamed short-term private equity firms and ruthless mobile network operators for its demise.

I am sickened and saddened for nearly 6000 wonderful employees who made @Phones4u into a great business. #ruthlessvodafone #ruthlessEE

Unfortunately combination of short term private equity strategy combined with ruthless network ‘partners’ & government killed @Phones4u

9.42am BST

Phones 4us fall into administration is awful news for its staff, and a blow to customers. But its a fillip for its high street rivals.

Shares in Dixons Carphone are up 2.5% this morning, on predictions that it will mop up more sales if Phones 4us stores dont reopen.

9.31am BST

Heres our Q&A on the Phones 4u collapse:

9.31am BST

Back on the collapse of Phones 4u, and the stricken retailer has said that full refunds will be paid to customers with outstanding orders.

The companys website is down this morning, complete with a glum emoticon:

The retailer has pledged to refund customers in full for any orders that have not yet been dispatched.

While there was grumbling on Twitter from customers who had ordered an iPhone 6 as recently as Friday, the company said it had ceased trading as soon as practically possible.

9.15am BST

The takeover talk in the brewing sector has also pushed Carlsbergs share up around 1.9% this morning.

8.58am BST

Is the hunter about to turn into the hunted?

Shares in British brewing giant SABMiller have jumped by 5% today, after an attempt to merge with Heineken was rebuffed.

SAB is the leading asset that everybody wants to own,

If you are InBev looking to truly build a global brewer, which they have been doing in recent years, the next asset that ABI would want to buy is SAB.

SAB strong in London +5.3% post #Heineken announcement, will Inbev make an offer?

SAB MILLER’S overtures to Heineken supposedly rejected out of hand. Some believe that SAB Miller could come under attack itself – InBev?

Too early on Monday to talk #beer ? Nah didn’t think so…a deal brewing? Watch SABMiller, Heineken & AB Inbev shares on M&A talk

8.27am BST

As expected, the weak Chinese factory data has hit shares in Europe. The main indices have all fallen in early trading.

…adding to last weeks growth uncertainty and giving PM Li little choice but to stimulate or miss 2014s growth target even if he has distanced himself from the former of late.

8.20am BST

As this chart shows, the Brent crude price has fallen by over 15% since June when it hit $115 per barrel.

Its now hitting levels not seen since the summer of 2012, when the eurozone crisis was raging.

8.05am BST

The Brent crude oil price has hit its lowest level since late June 2012.

Obviously economic growth in China is one of the key drivers of world growth and generally of oil demand.

As it currently stands, it seems likely that the (oil) demand growth wont keep up with the growth in supply capacity.

7.55am BST

Kevin Lai, senior economist with Daiwa Capital Markets in Hong Kong, was also alarmed that Chinas industrial output slowed so sharply last month.

He told Bloomberg:

This is really bad.

The economy continues to slow down despite the fact that there has been some policy easing, and the data confirm what import growth has been telling us.

7.50am BST

Australias stock market led the fallers in Asia/Pacific overnight, down 1% following the surprise drop in Chinese factory growth:

Capital Spreads trader Jonathan Sudaria says the Chinese industrial slowdown has come at a bad time:

As if traders didnt have enough to contend with this week what with the Scottish referendum and the FOMC meeting, China has flapped their hands in the air to remind everyone that they are facing an abrupt slowdown

7.44am BST

Good morning, and welcome to our rolling coverage of the financial markets, the world economy, business and finance.

Theres a nervous air in the markets today after Chinas industrial sector posted the weakest growth since the financial crisis began six years ago, according to data released over the weekend.

This reading was the weakest since March 2009, with a big drop off in ferrous metal smelting. This resulted in power and heat production falling 1.7%. In the past, electricity consumption has been used as one of the most accurate indications of activity and this partial read will be a concern.

Growth also slowed in retail sales and fixed asset investment. There will now be plenty of talk around Chinas growth target and whether it can be achieved with such mediocre activity.

#Phones4U shops to not open this morning as company goes into administration via @SkyNewsBiz http://t.co/WCAw270GZy pic.twitter.com/b2CROt9TUO

Latest Scottish polls over the weekend lean towards the ‘No’ camp but still to close to call heading into this Thursday’s vote…

Continue reading…