Pound climbs but FTSE 100 falters as Draghi says its 'too early' to assess Brexit impact on eurozone

Equipment rental group Ashtead climbed to  its highest level in more than a year after its larger US rival United Rentals posted better-than-expected second quarter results.

On Wednesday night, United Rentals reported earnings before interest, tax, depreciation of $679m, more than 1pc ahead of consensus forecasts. The trading update also showed the first month-on-month rental rate rise in 16 months. In its wake, the US-listed stock rallied and triggered positive read across for Ashtead.

Analysts at Stifel said the key takeaway from the United Rentals trading update is “improved confidence” in the direction of rental rates in the US market. Hector Forsythe, of Stifel, said: “This has been a bear concern covering both United Rentals and Ashtead.”

Meanwhile, after speaking to Ashtead, US investment bank Jefferies said the group North American brand Sunbelt remains on track to deliver its volume growth target of 10 to 15pc in 2017 thanks to US macroeconomic data supporting “continued non-residential growth” in 2016 and 2017.

The share prices of United Rentals and Ashtead are very highly correlated. In April, when United Rental lowered its revenue outlook for the year, it weighed heavily on Ashtead, despite its own positive trading update.

The FTSE 100 stock jumped to the top of the blue chip index, up 57p, or 5.1pc, to £11.85.

On the broader market, the FTSE 100 closed down just 29.10 points, or 0.43pc, at 6,699.89, after the inaction from the European Central Bank. The ECB left monetary policy unchanged, as it noted that financial markets have reacted in a “fairly resilient” fashion to the Brexit vote.

Miners were also among the gainers, bouncing back from two torrid trading sessions, after copper touched a one-week high nearing $5,000 a tonne on the back of a solid China imports. The dollar also eased back from a four-month high, making commodities cheaper for other currency holders. Shares in Glencore jumped 6.8p to 183p, Antofagasta rose 12.3p to 495.2p, Rio Tinto was 38p better at £23.77, BHP Billiton climbed 12.8p to 939.2p and Anglo American edged up 13.3p to 787.7p.

Costa Coffee and Premier Inn owner Whitbread made gains of 50p, or 1.4pc, to £37.11 despite broker Kepler Cheuvreux cutting its target price from £42 to £35.

On the other side, a profit warning from Lufthansa triggered a severe bout of turbulence for airline stocks across Europe. The German flag carrier said forward bookings had declined significantly due to “terrorist attacks and greater economic uncertainty”. Meanwhile, low cost carrier easyJet said security concerns and weaker consumer confidence had put a dampener on its summer season. Shares in the FTSE 100 stock fell 60p to £10.67. British airways owner IAG also dropped 15.1p to 405.6p, Wizz Air lost 100p to £14.25, and Ryanair fell 0.6p to €11.08.

Disappointing retail sales for June knocked shares in Next, down 139p to £48.96. Marks & Spencer also lost 6.9p to 328.5p and Primark owner Associated British Foods slipped 40p to £27.70.

Separately, a note from the UBS Evidence Lab research team said conditions for UK clothing retail have “continued to remain tough” with cold and wet weather in April and June impacted sales in the second quarter.

On the mid-cap index, investors cheered the news that William Hill’s chief executive James Henderson had been ousted from the bookmaker as it seeks to revive online growth. Shares leapt 29.2p, or 10.6pc, to 304.3p.

Online electronics retailer AO World was also among the top mid-cap risers, up 13.2p to 147.6p, after it posted revenue growth of 25pc in the three months to June 30.

Meanwhile, in its pre-close trading statement, challenger bank Close Brothers said it had seen little direct impact on its business post-Brexit. Shares jumped 45p to £12.32 in its wake. Its peer Virgin Money also advanced 8.6p to 240p following a bullish broker note from Investec. Although it admits the FTSE 250 stock’s recent sell-off has been “brutal”, down 27pc since the Brexit vote, as markets now move to price in its potential impact, Investec thinks that “much of the market’s implicit maths appears highly suspect”. 

Finally, shares in Aim-listed Savannah Petroleum ended the day flat despite reports of rumoured interest from Indian state oil company ONGC. A report in local press in Niger said ONGC is visiting Savannah next week. Just last week, Savannah said it “continues to consider the introduction of a partner to its assets.”

On that note, it's time to close up. Thanks for following our markets coverage today. 

Aformer HSBC currency trader who is wanted by the United States as part of a fraud investigation has “strongly denied” claims that he ramped up the cost of a $3.5bn foreign exchange deal.

Stuart Scott, 43, has been accused of working with Mark Johnson, an HSBC executive who was bailed in New York on Wednesday, to trade ahead of a client’s currency deal to benefit the bank’s own positions, known as front-running.

"Our client strongly denies the allegations. Given there are ongoing proceedings it would be inappropriate to comment further at this time,” said Gerallt Owen, Mr Scott’s solicitor at Withers in London. A warrant has reportedly been issued for Mr Scott's arrest.

Mr Scott was HSBC'S head of foreign exchange trading for Europe, the Middle East and Africa until late 2014.

Neighbours of Mr Scott’s seven-bedroom home in Hertfordshire said the property had been quiet until recently. “I’ve never seen a window open until today and never seen three cars outside until today,” said one.

Meanwhile, a neighbour of Mr Johnson described her shock at the arrest of the “chilled out” family man.

Speaking near Mr Johnson’s detached mansion in the New Forest, Hants, the neighbour said the HSBC executive enjoyed driving his Land Rover Defender around the woods and would often be seen wearing a pair of shorts.

"Mark is a charming man, he's very lovely and this comes as a total surprise. They're a picturesque family, they're chilled out... It's a big family, there are six children,” she said.

Workmen outside Mr Johnson’s house in Burley said the banker and his wife Diane were away. "She is on holiday. She's been on holiday for a little while now, she hasn't shown any signs of returning home,” said one garden worker.  

Report from Marion Dakers (Read more here)

European bourses ended the day mixed after the ECB left its monetary policy unchanged. 

At close of play: 

• FTSE 100: -0.43pc
• DAX: +0.32pc
• CAC 40: +0.11pc
• IBEX: +0.18pc

 Joshua Mahony, of IG, said: "After a week of anticipation, today’s ECB meeting has done little to spark another surge in European stock markets, despite expectations of yet another dovish bombshell. Despite headlines of continued gains in the US, it has been a largely uninspiring week, with a distinct lack of volatility leading up to today’s ECB release. We have seen the FTSE regain traction towards the end of the session, which shows that despite the lack of action this week, this represents more of a delay than anything." 

Miners were also among the gainers, bouncing back from two torrid trading sessions, after copper touched a one-week high nearing $5,000 a tonne on the back of a solid China imports.

The dollar also eased back from a four-month high, making commodities cheaper for other currency holders.

Shares in Glencore jumped 7.9p to 184.1p, Antofagasta rose 14.1p to 496.6p, Rio Tinto was 44.5p better at £23.83, BHP Billiton climbed 16.9p to 943.6p and Anglo American edged up 13.6p to 788p.

Uncertainty in the advertising and property markets following the EU referendum has hit trading at Daily Mail and General Trust, the publisher of the Daily Mail and Mail on Sunday newspapers.

Delivering a quarterly trading update on Thursday, the company said that in the three months to end of June, revenues at its dmg media business were 6pc lower compared with the previous year. On a like-for-like basis, which excludes currency movements, acquisitions and disposals, revenues dropped 2pc.

The dmg media unit, which produces the Mail newspapers and freesheet Metro, reported a 1pc decline in circulation sales, thanks to lower volumes. The fall came despite the publisher raising the cover price of the Daily Mail in February.

The company added that November’s sale of its Wowcher discount business also had an “adverse impact”, contributing to the weaker performance.

Advertising revenues across dmg media were 10pc lower against a year ago, though the company said the drop in newspaper advert sales was partly offset by stronger demand online.

Read more here

European markets have trimmed their losses and some have returned to positive territory after the ECB press conference. 

The FTSE 100 is down 0.22pc, Frankfurt's DAX is now 0.18pc higher and the CAC in Paris has dipped 0.2pc. On currency markets, the pound is trading 0.15pc higher on the day at $1.3208 against the dollar. 

Connor Campbell, of Spread Ex, said: "A sedate, insubstantial statement from the ECB led to a sedate, insubstantial afternoon from the global markets this Thursday.

"There was nothing particularly new from an unflustered, if not particularly forthcoming, Mario Draghi this month, the central bank chief merely adding the Brexit to his usual list of downside risks (namely the slowdown in emerging markets and the glacial pace of structural reforms in the region) to the Eurozone economy without providing much insight into the referendum result’s actual impact. Overall Draghi and co. did little to change the perception that September is the likeliest time for any ECB action, something that will again be dependent on what steps the Bank of England takes in August."

According to data released this afternoon, US existing home sales hit 5.57m last month, its highest level in nine years. 

It was above forecasts of 5.48m and below May's revised figure of 5.51m. 

It is another reassuring piece of economic data which may bolster interest rate hike bets. 

Turning attention away from the ECB, the opening bell has sounded on Wall Street and US stocks are little changed amid mixed corporate earnings. 

The subdued trading session comes a day after the Dow Jones and the S&P 500 both hit fresh intraday record highs. 

Almost 30 minutes into trading, here's the state of play: 

• Dow Jones: -0.16pc
• Nasdaq: +0.08pc
• S&P 500: -0.08pc

More reaction to the ECB policy decision and press conference: 

Ian Kernohan, economist at Royal London Asset Management, said:

"While we think Brexit uncertainty is mainly an issue for the UK economy, there is also bound to be some knock-on impact on the Eurozone.  With post-Brexit evidence still patchy, we think the ECB will wait until the September meeting before extending its QE timetable.  

"Inflation remains far below the ECB’s target of 2pc and while headline inflation will rise later in  the year, thanks to the fading impact of a lower oil price, underlying inflationary pressures still remain very low.  Delaying until September will allow an assessment of any Brexit impact to be outlined in the new ECB staff forecasts."

That didn't take long. The initial gains during Draghi's press conference have been erased. 

The euro is now just up 0.5pc at $1.1012.

Here's a graph to show how the euro has performed so far today: 

Claus Vistesen, of Pantheon Macroeconomics, reacts to this afternoon's ECB press conference: 

"Maybe it is just us, but the pace and tone of Mr. Draghi’s introductory statement suggest that he and the governing council have already cast their mind on the upcoming Summer holiday. In short, we got no significant new information from the ECB today. The central bank reiterated the strong commitment to forward guidance, and to reach its inflation target “without undue delay.” Mr. Draghi also noted, as we expected, that the council prefers to wait until the updated staff projections in September, and the additional economic data over the summer, before “re-assessing” its policy stance. Mr. Draghi repeated that the cyclical recovery remains in place, but also that risks to the economy “remain tilted to the downside". Headwinds include uncertainty over Brexit, lack of structural reforms, slow EM growth and ongoing balance sheet adjustment, but the statement did not put more emphasis on risks in light of the U.K. referendum result. Mr. Draghi said that financial markets have been relatively resilient in the face of the “shock,” and also that the hit to the economy depends on unknown factors which are very difficult to quantify. For the record, we continue to think that the ECB formally will extend QE to September 2017 at its next meeting.

"Mr. Draghi dodged all questions on possible adjustments to the allocation of QE and the capital key. It has, according to the president, not been discussed. Finally, perhaps the most interesting bit from the press conference was Mr. Draghi’s comments that the trajectory of bank equities are “important” for the central bank because a persistent and strong decline implies a higher cost of capital and lower lending growth. Mr. Draghi also appeared to support the need for a public backstop for banks in “exceptional circumstances.” We doubt that the ECB is planning to add bank equities to QE, but this is a comment that will undoubtedly be revisited by journalists if EZ bank equities suffer further."

Banking stocks have risen after Draghi proposed the development of a fully functioning NPL market where NPL could easily sold.

The Stoxx 600 Banks index rose 0.4pc following Draghi's comments. 

When asked if his son's role as a bond dealer in London is a conflict of interest, Draghi says his son was a trader, not a bond dealer, so there's no conflict of interest. And there was none five years ago when he was asked the same question. 

Twitter enjoyed this one: 

And on that note, the press conference concludes.  

Returning to non-performing loans, Draghi tells reporters that a public backstop for banks may be needed in exceptional circumstances. 

He says "the longer we have a NPL problem, the less functioning the banking system".

Bank equity prices are of "some significance for policymakers", Draghi said earlier, adding that rules contain all flexbility for exceptional circumstances in bank aid. 

When asked about the impact the political crisis in Turkey will have on the eurozone recovery, Draghi responds: 

"It is very difficult to see how these geopolitical events will affect the (euro zone) economy ... it's very likely they will affect confidence, but it's very hard to predict how they will affect things in the immediate future."

Most think Draghi is doing his best to dodge many questions today: 

Commenting on the drop in banking stocks post-Brexit, Draghi says the following: 

"Bank equity prices are of some significance for policymakers because, when if they drop in the way they did, one would assume this is to stay, cost of capital would increase and therefore the net return on lending would decrease, and would suggest on the banking side a more conservative lending behaviour.

"That's why we do care about bank equity prices for the transmission of our monetary policy."

On the topic of non-performing loans, Draghi says: 

"Monetary policy is semi-supportive of economic activity and is focused on maintaining price stability. But also other policy measures are needed to reap the full benefits of our monetary policy and one of them is to address the non-performing loans and more generally non-performing exposures in the euro area.

"We wouldn't consider it a risk but it has to be addressed.

"It is a complex programme and we may come back and address it later on.

"We have in place the rules, the rules of state aid and as I have said several times these rules contain all the flexibility to cope with exceptional circumstances.

"The power and the responsibility in activating these rules lies with the Commission."

The euro rose to hit a day's high against the dollar on Thursday, after European Central Bank chief Mario Draghi said only that the bank would take time to reassess any changes in the economic outlook.

The ECB earlier as expected kept interest rates unchanged at record lows but there was no hint in Draghi's comments or the bank's post-meeting statement that it is set on easing policy further in September to support growth.

Some investors had speculated that in response to last month's vote by Britain to leave the European Union, the bank would signal more stimulus was imminent. The euro rose to $1.1060, up 0.35 percent on the day.

"The euro has squeezed higher as Draghi offered no surprise and no strong sense of urgency," said a trader in a North American bank.

Italian government bond yields rose to a three-week high while German yields fell after Draghi said no attention was given to specific instruments.

Media reports in the run up to the meeting had said the ECB was considering changing the country mix of its quantitative easing programme to skew purchases towards Italy.

Report from Reuters

On the impact of Brexit on the eurozone, Draghi says the figure that "circulated in the aftermath of Brexit was the impact (on euro zone growth) of 0.2-0.5pc over three years, I believe the Commission has come out with a similar figure of 0.25-0.5pc".

He thinks these estimates should be taken with "some grain of caution". 

"Large uncertainties prevail because first of all these figures will in the end depend on how long is the stretch of time for these negotiations to be completed and therefore to give a certain outlook which we don't have today."

Financial markets have reacted in a "fairly resilient" fashion to the Brexit vote, Draghi says. 

It's too "early to say" what is going to be the final impact of Brexit on the eurozone, he adds. "It's a material risk". 

He adds that the QE programme has been "quite successful". 

Again, Draghi talks of the ECB's "readiness and willingness to act" if needed. 

Here's what ECB president Mario Draghi said about Brexit during today's ECB press conference: 

"We concluded that we didn't have information yet to take decisions, and we decided that over the coming months when we have more information including new staff projections we'll be in a better position to assess the underlying macroeconomic conditions and no attention was really given to discuss specific instruments at this point in time.

"Following the UK referendum on EU membership, our assessment is that euro area financial markets have weathered the spike in uncertainty and volatility with courage and resilience. The announced readiness of central banks to provide liquidity if needed, and our accommodative monetary policy measures, as well as our robust regulatory and supervisory framework, have all helped to keep market stress contained. Financing conditions remain highly supportive."

Speaking during the ECB press conference, Mario Draghi says fiscal policies should remain in compliance with EU rules.

He adds that "no attention has been given to specific instruments". This causes Italian government bond yields to rise, and German yields falls. 

The euro hit an intraday high during the ECB press conference, up to $1.1060 against the dollar.  

Inflation rates are likely to remain very low in the coming monhts, but will start to pick up later in the year, Draghi said. 

He said that inflation rates should increase further in 2017 and 2018. 

Eurozone growth was supported by domestic demand, Draghi says. 

Digging into the detail he says second quarter growth will be at a lower rate than the first quarter, but he expects recovery to proceed at a moderate pace. 

The fiscal stance in the eurozone is expected to be mildly expansionary this year and neutral next year, he adds. 

Risks to the eurozone's growth outlook are tilted to the downside. 

Draghi says market stress was contained post-Brexit. He adds that the recovery will be ongoing. 

Nevertheless, given prevailing uncertainties, the European Council will monitor market developments. 

Over the coming months, when more information becomes available, Draghi says the ECB will be in a "better position" to reassess economic conditions. 

He adds that the central bank is ready to act if necessary, by using all instruments in its mandate. 

ECB president Mario Draghi begins press conference by reiterating that interest rates will remain lower for extended period of time, as per press release. 

With just under two minutes to go until the ECB press conference - you can watch it here: 

After the ECB left its monetary policy unchanged, as expected, markets now turn their attention to ECB president Mario Draghi who will deliver a press conference at 1.30pm. 

He is expected to discuss the impact of Brexit on the EU, the state of Italian banks and the expected difficulty in finding enough bonds to buy under its asset purchase programme.

 As we look towards the press conference, the pound is trading down 0.11pc against the dollar at $1.3173. The FTSE 100 has fallen 0.43pc, Frankfurt's DAX is off by 0.11pc, the CAC 40 in Paris has dropped 0.39pc and the Spanish IBEX is flat on the day. 

Naeem Aslam, of Think Markets  UK, reacts to the ECB's decision to leave interest rates on hold, as widely expected: 

"There was no smoke from the ECB's gun as the bank has decided to hold its fire as expected. Perhaps, it was the best move because the bank certainly wants to assess the consequences of Brexit which has triggered the need for more QE and dragged the bond yields in negative territory.

"Although some investors do question that if these central banks; the BOE and the ECB will bring any more stimulus. Markets are addicted to this medicine and most of the boom which we have experienced in the equity market is based on the basis of this cheap funding. If these liquidity tanks start to run dry, we may start to see heavy sell off which many have been waiting for. Nonetheless, these central banks need to be more logogical with their approach and they understand that their cheap money is creating another bond bubble and they are taking cautious approach with respect to this."

Here's the full press release: 

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.

Regarding non-standard monetary policy measures, the Governing Council confirms that the monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

Here's a link to the press release

The European Central Bank has left its benchmark refinancing rate unchanged at 0pc. 

It also left its interest rate on marginal lending facility unchanged at 0.25pc and its interest rate on deposit facilities unchanged at -0.4pc. 

It said it continues to expect rate to stay at present or a lower level for an extended period. 

Monthly asset purchases of 80bn euro intended to run until March 2017. 

Aberdeen Asset Management has increased the value of its property fund two weeks after it slashed 17pc off its value, in a move that indicates some confidence is returning to the commercial property market.

Martin Gilbert, chief executive of Aberdeen, said this morning that he had been able to reduce the “temporary dilution adjustment” of 17pc that had been applied to the fund on July 6 to 7pc today.

Aberdeen made the decision to write down the fund’s value on the back of what it called “rapidly changing commercial property market conditions” in the wake of the vote to leave the European Union.

Investors had rushed to redeem money from the funds, and the discount was intended to stem the tide while the fund improved its cash position, potentially by selling assets.

Report from Rhiannon Bury (Read more here)

With just 15 minutes to go until the ECB policy update is released, analysts expect no action from the central bank today. 

 Ahead of the ECB's first meeting since the Brexit vote, European bourses remain in the red. 

London's FTSE 100 is down 0.4pc on the day, Frankfurt's DAX is off by 0.11pc, the CAC in Paris has lost 0.34pc and the Spanish IBEX is trading down 0.17pc. 

Stock markets have also been hurt by a profit warning from Lufthansa which has pulled airline stocks sharply lower. 

Connor Campbell, of SpreadEx, said: " It will be interesting to see how the indices behave around the ECB statement later this afternoon, especially if Draghi provides guidance for the timeline of any potential stimulus." 

Shares in European airline stocks have been hammered today after Lufthansa issued a profit warning, saying advanced bookings to Europe had declined significantly due to "terrorist attacks" and greater political and economic uncertainty. 

Low cost carrier easyJet also posted a 7.7pc slide in revenue per seat and warned trading prospects were uncertain. 

Airline stocks have tanked to the bottom of the Stoxx 600 Travel and Leisure index, with stocks nursing losses of between 3 and 8pc. 

The boss of easyJet has conceded the airline faces the toughest aviation environment since she took the helm six years ago, as the carrier rattled investors by posting a plunge in revenues and admitting it could not make any profit forecasts.

Shares in the budget carrier dropped as much as 7.6pc to £10.41 in early trading after the airline said a string of terrorism attacks, the Brexit vote and sterling’s subsequent tumble, and a series of air traffic controller strikes in France had sent total revenue per seat down 8.3pc in the three months to the end of June.

Overall revenues slid 2.6pc to £1.2bn and easyJet refrained from giving guidance for the full-year, because the nature of the challenges facing the airline industry are so unpredictable.

Carolyn McCall, easyJet’s chief executive, said it “definitely” faced the most challenging environment since she took the job in July 2010 and added: “Certainly from our point of view we would say this is, for airlines, one of the most difficult periods that we’ve seen in a very long time.”

Report by Ben Martin (Read more here)

As European bourses take a breather ahead of the ECB's policy update (its first since the Brexit vote), Mike van Dulken, of Accendo Markets, previews the event: 

"No rate changes are expected (too early to react to Brexit, same as BoE) but there is the possibility that its €80bn/month QE stimulus programme is tweaked. This because it finds itself in a bind, fishing from the banks of a bond pond drying up fast as security-seeking investors drive up prices, leaving fewer and fewer eligible yielding tiddlers to net.

"Draghi's press conference is likely to be littered with the usual dovishness to keep investors happy about accommodative policy for longer. And while hopes of helicopter money in Japan may have been dashed this morning, markets aren't quite reaching for the ejector seat. Just another pause?"

Turkish stocks plunged by almost 4pc and the lira hoovered at record lows affter the imposition of a state of emergency and fears the country would lose its investment-grade credit rating.

The move by credit rating agnecy S&P to cut the country's sovereign rating to BB/B rattled investors. 

The yen, which had slumped to a six-week low this morning, has leapt 1pc after Bank of Japan governor Haruhiko Kuroda ruled out helicopter money. 

In an interview with BBC Radio 4, Kuroda quelled speculation that Japan will introduce measures that involve the central bank directly funding government spending.

Overnight it slumped to its lowest level in six weeks on reports Tokyo was considering a package of at least 20 trillion yen to boost the economy. 

Here's a look at what happened to the yen following Kuroda's comments: 

Jasper Lawler, of CMC Markets, said Kuroda's comments will "disappoint investors" who had been selling the yen in anticipation of the Bank of Japan announcing helicopter money at its meeting next week.

"After the failure of its current quantitative easing program to boost inflation, helicopter money is one of the few reaming tools in the Bank of Japan’s arsenal."

Global stocks neared nine-month highs this morning as investors awaited the first post-Brexit European Central Bank policy update. 

The MSCI's all word index, which covers 46 countries, hit its highest level since early November today, up 0.51pc on the day. 

Lukman Otunuga, of ForexTime, thinks the ECB is under pressure again to take more actions. 

"Most developed economies central banks’ signaled more easing to come this summer, but with no fresh update on the status of the economy and only four months since the ECB implemented new measures by cutting rates 10 basis points and increasing their monthly QE purchases by €20 billion, I do not expect any new major actions to be taken at this meeting.

"Mr. Draghi’s only tool is likely to be his dovish words on opening the door for further easing if economic conditions deteriorated, however, this might not be enough to send the Euro lower unless he provides clear guidance to markets on what the central bank may do in September when it releases its new economic forecasts. If he disappoints, the EURUSD could climb towards 1.12."

Uncertainty in the UK after the European Union referendum is likely to subdue demand for commercial property, which could in turn affect rental income for real estate companies, the boss of Land Securities has warned.

Ahead of the FTSE 100 company’s annual general meeting today, Rob Noel, Land Securities’ chief executive, said he expected “business uncertainty” to persist until there was more clarity on both the timing and terms of the UK’s exit from the EU.

“Demand from occupiers is likely to be subdued until confidence returns and this may have an impact on rental values,” he said.

He added that Land Securities, which is the UK's largest commercial property company, was in an “excellent position” to deal with a more restrained market because it has low leverage, high levels of occupancy in its buildings, and long lease terms, guaranteeing income.

The company announced today that it would increase its total dividend per share for the year by 9.9pc.

Report by Rhiannon Bury (Read more here)

Meanwhile, in Greece, US Treasury secretary Jack Lew has said it is important for Greece to stick to its budget reform path and to make headway on milestones due in October. 

Lew says Greece's debt payments must be affordable within the country's economic situation. 

Here's our full piece on the UK borrowing figures: 

UK public borrowing dropped to the lowest in nine years in June as the Treasury's coffers were boosted by higher tax receipts from workers and businesses.

Public sector net borrowing, excluding public sector banks, stood at £7.8bn in June.

This was £2.2bn lower than the same month a year ago and was well below economists' estimates of a fall to £9.5bn. It was also the lowest June deficit since 2007. 

Income tax, national insurance, VAT and corporation tax receipts all rose last month, with income tax receipts up 6.3pc to £12.2bn, according to the Office for National Statistics (ONS).

The figures represent the final set of borrowing figures under George Osborne as Chancellor. 

Despite the boost, economists said new Chancellor Philip Hammond was unlikely to meet the Office for Budget Responsibility's (OBR's) current deficit target of £55.5bn this year.

Report by Szu Ping Chan (Read more here)

Unilever, the consumer giant behind brands including Dove and PG Tips, has managed to combat intense competition and tough trading in Europe by reporting strong sales of ice cream, deodorants and haircare, just one day after the surprise acquisition of ashaving company.

Underlying sales rose 4.7pc to €26.3bn (£21.9bn) in the first six months of 2016, beating analysts’ expectations. Pre-tax profits remained largely flat at €3.6bn, up 0.8pc, but increased 6pc on a constant currency basis, which strips out the damaging effects of currency movements.

The FTSE 100 consumer giant is fighting a bitter price war in its home European market, which makes up nearly a quarter of the business.

In a sign the Anglo-Dutch company is moving away from branded goods, it announced a deal earlier this week to buy the Dollar Shave Club, a US company that sells cheap razors, in a deal valuing the business at around $1bn.

Chief executive Paul Polman said the company had delivered profits “despite a challenging environment, slower global economic growth and intensifying geopolitical instability”.

Report by Kate Palmer (Read more here)

European markets are firmly in the red this morning with many investors focusing on the European Central Bank's meeting this afternoon. 

Just over two hours into trading, the FTSE 100 is off by 0.37pc, the DAX has dropped 0.39pc and the CAC 40 is down 0.53pc.

Chris Beauchamp, of IG, said: "Markets are gearing themselves up for the ECB’s decision this afternoon, although given the crashing let-down from Mark Carney last week this time round most investors are not looking to get too excited.

"Nonetheless the relatively shallow pullback seen in eurozone markets this morning would seem to indicate a calm atmosphere – given the myriad problems facing the eurozone, and indeed the UK and EU, it seems highly likely that Mario Draghi will seek to soothe frayed nerves with a generally dovish statement. In other central bank news BoJ governor Kuroda has dashed the hopes of those looking for ‘helicopter money’, a fact that could start to hit the hitherto strong move higher in the  dollar-yen cross. Should this start to fall, we could see stock markets start to take a hit as well, as the USDJPY pair is usually taken as one of the handiest guides as to the strength of global risk appetite."

Bank of Japan Governor Haruhiko Kuroda said he sees no possibility for so-called helicopter money. 

In an interview with BBC Radio 4 program, Kuroda quelled speculation that Japan will introduce measures that involve the central bank directly funding government spending.

Kuroda  also repeated that he is determined to rid Japan of its deflationary mindset and that there are no significant limitations to further monetary easing if needed by the Bank of Japan.

The UK June public sector net borrowing excluding banks fell to £7.8bn that's its lowest level since June 2007. 

The data which was released from the ONS shows that the UK public sector net cash requirement was £14.855bn last month, compared with £13.080bn in the previous year. 

The ONS said public finances data does not reflect any significant impact from the EU referendum. 

Jeremy Cook, of World First, reflects on the UK retail sales after it fell 0.9pc suffering its largest decline in six months. 

"The UK consumer is a hardy beast but it looks like the beast tightened its belt into and after the Brexit vote. While the majority of this data was taken pre-June 23^rd, some wasn’t and this will raise concerns about the UK growth machine moving forward. The UK’s recovery since the Global Financial Crisis has been one of consumption with savings ratios depressed and consumer credit expanding; there is little further to push this bubble however in a landscape where wages are likely to remain depressed and confidence low.”

“It will be many months before the true impact, good or bad, of Brexit is felt and expressed in structured data but housing and consumption are feeling chill winds already.”

The pound has fallen in the wake of disappointing retail sales data released minutes ago. 

It fell into negative territory against the dollar briefly, before recovering. It is now flat at $1.3190.

UK retail sales suffered their biggest fall in six months in June, according to data released from the Office for National Statistics this morning.

Officials blamed poor weather hurting clothes sales rather than the impact of the Brexit referendum. 

The ONS said that during the June period, sales volumes fell 0.9pc, a bigger drop than economists' forecasts of a 0.6pc dip. In May, retail sales rose by an above-average 0.9pc in May.

Compared with a year earlier, June sales growth slowed to 4.3pc from a robust 5.7pc in May, a bigger decline than the easing to 5.0pc forecast.

Average store prices (including petrol stations) fell by 2.5pc in June 2016 compared with June 2015.

The amount spent in the retail industry decreased by 0.9pc compared with May 2016, and increased by 1.5pc compared with June 2015.

According to a survey conducted by Bloomberg, economists see the ECB's asset-purchase program staying at €80bn a month for now. 

They see the greatest chance of extra stimulus coming at the September 8 meeting and they predict an extension of quantitative easing beyond March 2017 as the instrument of choice.

However, Naeem Aslam, of ThinkMarkets UK, thinks the ECB is "likely to make some tweaks". 

"The reason we contemplate that the ECB is likely to make those tweaks in this meeting is because Germany is already struggling with their government bond purchase due to the issuer limit. The Bundesbank needs to purchase 253 billion euros of debt by the end of this month, but due to the present issuer limit of 33pc, the world of eligible assets stand at €216bn.

"Regardless of whether or not the ECB addresses this issue in this meeting or the next, they cannot afford to see the bond yield dropping below current levels and we believe that the bank may remove a restriction on the amount of a single issue which is currently at 33pc. If they increase this percentage to 50pc, it could give them a little breathing room and the shortfall will be €54bn; if they increase this percentage to 70pc, the shortfall will only be shy of €5bn. This will certainly get them closer to the task at hand."

Pound extended its gains this morning, up 0.4pc to $1.3243 against the dollar, after Kristin Forbes, one of the nine members of the Bank's monetary policy committee, said the Bank of England should not rush into a decision to cut interest rates. 

Last week, the Bank of England left interest rates unchanged but said that most of the members of the MPC expected to give the economy more help at its meeting next month. 

Tobias Davis, of Western Union Business Solutions, said the "reassuring words" from Kristin Forbes have sent the pound towards the high 1.32s, "easing slightly this morning on a strong US dollar". 

"Earlier in the session, broad improvement in employment and the claimant count did squeeze out some shorts and boost the currency, welcome when we started the day sub 1.31. It feels to me that the market is not as short as many perhaps consider, and broad medium to long run positioning is not abundant."

Kristin Forbes, one of the nine members of the Bank's monetary policy committee has said in an article for The Daily Telegraph that markets have "stabilised" after an initial "panic" post-Brexit. 

Here's an extract from her piece: 

“Keep calm and carry on” is a good motto to live by—as well as a good strategy for monetary policy.

The initial market reaction to the UK vote to leave the European Union was more panic than calm. UK-focused equities fell by 11pc in one day.

Sterling experienced its sharpest two-day fall ever. Global markets also responded sharply But markets functioned efficiently, processed these large price swings, and “carried on”.

The largest price movements have since moderated. Sterling has recovered one quarter of its post-referendum fall. Most major global stock markets (including the FTSE) are now higher than before the vote.

It will take longer to process the impact on the UK economy. Leaving the European Union will involve an intimidating renegotiation of numerous trade agreements.

Uncertainty may cause businesses to delay hiring and major new projects. Sectors that involve long-term commitments or major expenses—such as commercial real estate and housing—will undoubtedly be hurt.

These effects will slow growth relative to its solid 2.7pc average over 2014 and 2015. The UK will probably lose its title of being the fastest growing G7 economy.

Read more here

Analysts have turned their attention to the ECB's first policy update since the Brexit vote: 

Jasper Lawler, CMC Markets: "There is no real expectation of the ECB adding to measures only recently implemented at its meeting on Thursday. The euro has fallen and the German DAX has recovered most of its post-Brexit losses so there is no financial tightening for the ECB to combat. The central bank is likely to remain in wait-and-see mode." 

 Mike van Dulken, of Accendo Markets: "Today’s focus will be the European Central Bank’s (ECB) latest monetary policy update from which no change is anticipated but any hints/forward guidance will be much appreciated by markets regarding further stimulus being required in light of the UK’s Brexit vote.

"With the BoE having held off this month saying it was too early to react to Brexit, its continental peer may well strike a similar tone today. However, it is struggling with its current €80bn/month QE programme fishing from an ever shrinking pool of available bonds as rallying prices depress yields, investors seeking security at any cost. All eyes still on you Mr Draghi. Still prepared to do whatever it takes?" 

European bourses are struggling this morning ahead of today's policy update from the European Central Bank.

• FTSE 100: -0.34pc
• DAX: -0.03pc
• CAC 40: -0.29pc
• IBEX: -0.19pc

 Mike van Dulken, of Accendo Markets, said: "A negative opening call comes in spite of positive sessions for both the US and Asia with the former attaining fresh heights thanks to acceptable US macro data, a decent stateside earnings season thus far and investors pricing in continued support from central banks. And while the global rally continues, a little breather is perhaps due (and to be expected) ahead of the latest ECB policy update this afternoon."

The low-cost airline endured a bumpy third quarter. Revenue per seat fell 8pc and total sales were down 2.6pc, as an increase in passenger numbers was offset by "significant external events".

Chief executive Carolyn McCall said:

"The economic and operating environment has been difficult in the third quarter due to a number of factors including air traffic control strikes and other industrial action, runway closures at London Gatwick and severe weather. These factors combined with industry capacity growth in short haul continue to have an impact on industry yields at a peak time of year.

"More recently currency volatility as a result of the UK's referendum decision to leave the EU as well as the recent events in Turkey and Nice continue to impact consumer confidence."

The disruption led to 1,221 cancellations and cost the airline £20m.

The gambling company's boss, James Henderson, has abruptly left the beleaguered bookmaker after less than two years at the helm.

Mr Henderson, who only became chief executive at Britain’s biggest bookie at the start of August 2014, is stepping down immediately. He has been replaced on a temporary basis by Philip Bowcock, the finance chief, until a permanent successor is found.

Mr Henderson’s tenure as William Hill’s chief executive has been marred by profit warnings and an exodus of senior staff, particularly in its struggling online division, which has shaken investor confidence in the business.

The bookie has also been left behind by a spate of deals in the gambling sector, which has put pressure on its once dominant position.

Alongside the management changes, the company confirmed it was on course to meet its guidance of £260m to £280m in annual operating profits this year.

Good morning, and welcome to our rolling coverage of all things business and finance.

The biggest story hitting the headlines today is that a British HSBC executive has been released on $1m bail after being charged with fraud linked to a giant $3.5bn currency trade. Mark Johnson, HSBC's head of FX and commodities for the Americas, was arrested by FBI agents at JFK airport in New York on Tuesday evening, in what marks a major escalation of the US Department of Justice's long-running investigation into foreign exchange trading at global banks.

Mr Johnson, 50, and 43-year old Stuart Scott, who left the lender in December 2014, face charges of conspiring to defraud a client five years ago by “front-running” a currency deal.

The allegations relate to the conversion of $3.5bn into sterling for a client company in December 2011, a transaction that allegedly netted $8m for HSBC, including Mr Johnson and Mr Scott. 

Also on the agenda today: 

Interim results: Unilever, WH Ireland, Nichols

Trading update: Tate & Lyle, SABMiller, easyJet, Daily Mail and General Trust, Britvic, SSE, Babcock International Group, Howden Joinery, Premier Foods, Close Brothers

AGM: Land Securities, Royal Mail, Paragon Entertainment, Kibo Mining, De La Rue

Economics: public sector net borrowing (UK), retail sales m/m (UK), unemployment claims (US), Philly Fed manufacturing index (US), HPI m/m (US), flash services PMI (US), flash manufacturing PMI (US), existing home sales (US), flash services PMI (EU), flash services PMI (GER), flash manufacturing PMI (EU), minimum bid rate (EU), ECB press conference (EU)