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Summary

  1. Bank of England warns on Brexit risk to global markets
  2. FTSE 100 closes down 16 points at 5,950
  3. Mark Carney clashes with Vote Leave campaign
  4. Lloyds backed by Supreme Court in £1bn bondholders case
  5. Rolls-Royce unveils driverless car

Live Reporting

By Chris Johnston

All times stated are UK

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Over and out...

Earlier than normal finish today for Business Live I'm afraid, but thanks for reading. We will be back bright and early on Friday at 06:00, so do join us then. 

BreakingSterling regains ground

Sterling has sharply reduced its losses against the US dollar and was trading at about $1.4150 after the news of MP Jo Cox's death. It was still down 0.3% on the day.

Wall Street still lower

Wall Street is still mostly down in afternoon trading, with the S&P 500 0.2% lower and the Nasdaq down 0.25%, although the Dow Jones is up ever so slightly.

Kroger, the supermarket operator whose results we reported earlier on, is the top riser, up 2.3% on the S&P, while Nike is the biggest faller on the Dow, down 2.1%. 

Astley versus Odell

Tom Odell
Getty Images

You may not be aware, but there's been a bit of a chart battle going on this week between new albums from 80s crooner Rick Astley (Never Gonna Give You Up) and the slightly more youthful Tom Odell (pictured).

Music journalist Rhian Jones tweets: 

View more on twitter

Theme park owner donates $1m to Orlando fund

Orlando protest
Getty Images

Comcast NBCUniversal says it is donating $1m to the OneOrlando fund for victims of the Pulse nightclub shooting in Orlando.

Tom Williams, chief executive of its Universal Parks & Resorts division, says:

Like so many other organisations and families in Orlando, those of us at Universal Orlando have lost people who were close to us - team members and members of our extended family. We are doing everything we can to take care of the families of those we lost and of all our team members as they grieve. In fact, we will be holding a private remembrance event tonight that will involve Universal theme parks across the globe."

The OneOrlando fund has been set up by Orlando mayor Buddy Dyer to assist those affected by the mass shooting last weekend in which 49 people were killed. 

Naira fears

Naira notes
Getty Images

The Nigerian naira could slide to a record low when foreign currency trading announced by the central bank starts on Monday, traders said. 

The central bank said on Wednesday it would abandon its 16-month policy of fixing the exchange rate. 

One trader said: "We are expecting an initial wide depreciation of the naira at the official window, but the rate could stabilise at around the present black market rate of 370 depending on how much dollars the central bank will be willing to push into the market."

BreakingMiners boost FTSE 100

Randgold mine
Getty Images

The FTSE 100 regained much of its losses late in the day to close just 0.27% lower at 5,950.48 points thanks to a rally for precious metals producers. Gold rallied as investors sought a safe haven on Brexit fears.

Randgold Resources was the top riser, up almost 4.8%, followed by Glencore and silver miner Fresnillo. 

Swiss warning hits bank shares

Credit Suisse sign
Getty Images

Speaking of European banks, the Swiss National Bank said today that UBS and Credit Suisse were both likely to need an extra 10 billion Swiss francs each to meet new leverage requirements. 

That sent shares in UBS and Credit Suisse down 1.3% and 3% respectively, while Deutsche Bank fell 3.7%. 

"Regulation once again about to tighten, coupled with low rates for longer across the board, are clearly unsupportive for the banking sector," said Stephane Ekolo, chief European strategist at Market Securities in London.

The eurozone bank sector fell as much as 3% to touch its lowest point since August 2012.

Franklin Templeton eyes the bathwater

BNP Paribas
Getty Images

Interesting that Franklin Templeton, one of the world's largest active fund managers, is sticking with its "overweight" stance on UK shares in two funds managed by its Templeton Global Equity group. 

"Investors remain sceptical, remain on the side-lines, and we think this is an opportunity on a stock-by-stock basis to find companies that get thrown out with the bathwater," said Dylan Ball, a portfolio manager at the Templeton Global.

The stance makes Templeton something of a contrarian ahead of next week's EU referendum. And in another decision that goes against the crowd, Mr Ball says it has bought into European banks such as BNP Paribas, Credit Suisse and UniCredit - even though the European financial sector has fallen more than 27% since the start of the year.

Tesco axes 24-hour trading at more stores

Tesco store
Getty Images

Retail Week reports that Tesco will axe 24-hour trading in a further 20 supermarkets as part of wider operational changes affecting almost 50 of its larger stores.

The company said the 20 stores scrapping round-the-clock trading, including Extra stores in Birmingham, Manchester and Sunderland, will close from midnight until 6am “in most cases” starting in mid-August.

I'd say read more here, but it's behind a paywall...

South Asian nations 'could drive future growth'

The predominately Muslim nations of South Asia could lead drive growth in the decades to come, Ogilvy and Mather chairman Miles Young tells the BBC's Ed Butler.  

This content only works in the UK.

The nations driving the next decades of growth, according to Ogilvy chairman Miles Young.

Gold hits $1,313 an ounce

Gold
AP

Gold is having a good day, hitting $1,313.65 an ounce - the highest level since August 2014 - as investors seek the safety of assets such as the precious metal and German government bonds.

"The longer the Fed is seen as delaying a rate hike, the better for gold," HSBC said in a note. 

Zuckerberg charity makes first investment

Mark Zuckerberg
Getty Images

Facebook founder Mark Zuckerberg's charity has made its first major investment, leading a funding round in a startup that trains and recruits software developers in Africa. The Chan Zuckerberg Initiative, set up with his wife Priscilla Chan, led a $24m funding in Andela.

GV (previously known as Google Ventures) was also part of the funding round. 

Andela selects and trains the top 1% of tech talent from Africa and places them in engineering organisations. It has nearly 200 engineers employed by its Nigeria and Kenya offices and will use the new funding to expand to a third African country by the end of the year.

"We live in a world where talent is evenly distributed, but opportunity is not. Andela's mission is to close that gap," Mr Zuckerberg said. 

Sterling under pressure

Sterling
Getty Images

After gaining some ground, the pound has slipped further against the dollar and is now down 0.8% at $1.4094.

Sterling has also slumped against the yen, down nearly 4% to close to a three-year low.

However, the currency is up almost 0.2% against the euro at €1.2638.

No dwelling on the past

Vision Next car
Rolls-Royce

Quite a precious quote from Torsten Müller-Ötvös, chief executive of Rolls-Royce Motor Cars, following its launch of a driverless concept car in London today:

"With the Rolls-Royce Vision Next 100 we were mindful not to dwell on the past. We wanted to be as innovative as possible and at the same time transcend the design history of the marque." 

Nuff said really. 

BreakingWall Street opens lower

Wall Street
Getty Images

Wall Street followed European markets lower on Thursday as the Federal Reserve's comments about the economy and rising fears about a UK departure from the European Union spooked investors. 

The Dow Jones industrial average was down 56 points, or 0.3%, at 17,583, the S&P 500 shed 0.4% at 2,063 points and the Nasdaq composite was down 0.5% at 4,809 points. 

Kroger sales rise

Kroger store
AP

Speaking of the US, Kroger - the country's biggest supermarket chain, said like-for-like sales rose 2.4% in the first quarter excluding fuel. 

Profits jumped 10% to $680m. The company, which also owns the Ralphs, Smith's and Food 4 Less grocery chains, said total sales rose 4.7% to $34.6bn. 

US inflation falls

Car yard
Getty Images

US consumer prices rose by a slightly lower than expected 0.2% in May, down from a 0.4% increase in April, following jumps in housing and healthcare costs. 

The cost of used cars and trucks fell by 1.3% - the biggest fall since March 2009 - while clothing rose 0.8%. 

The Federal Reserve kept interest rates unchanged on Wednesday and said it expected inflation to remain below its target into next year. 

Eurozone banks slide

Chris Johnston

Business reporter

Deutsche Bank
Getty Images

Shares in eurozone banks are out of favour, sinking to near four-year lows, with Deutsche Bank down 3.7% and Credit Suisse off 3.3% to a record low. 

"The global economic and political outlook is dark," said Chirantan Barua, an analyst with Bernstein. "Brexit is fuelling uncertainty and will have ripple effects across Europe. With so much uncertainty, why would you buy a bank stock now?"

Throwback Thursday - 1975 Europe referendum

BBC Political Editor Laura Kuenssberg puts the dispute over the Bank of England's EU referendum comments in some context. 

View more on twitter
View more on twitter

Vote Leave questions Bank Brexit comments

The World at One

BBC Radio 4

Bank of England
BBC

The Bank of England's prediction of a "further fall" in the pound if the UK leaves the European Union goes against its core objectives, says Andrea Leadsom, an MP campaigning for Vote Leave.

"Their overriding objective is to ensure financial stability. This intervention is designed to do the exact opposite," she tells BBC Radio 4's World at One.

Rather than saying they have the tools to deal with Brexit, "they are instead going along with those forecasts saying there will be some kind of meltdown", she says.

"They have strayed out of monetary policy into predicting what might happen behaviourally."

Rolls-Royce unveils driverless car

Rolls-Royce Vision Next 100
Rolls-Royce

It looks a bit like the Batmobile, but the car above is actually Rolls-Royce's first driverless car.

The Rolls-Royce Vision Next 100 - unveiled in London - is designed to look like it is "floating", according to the car maker. 

Among its features is a luggage compartment where the engine would normally be, and 28-inch tall wheels that are hand-built from aluminium. 

UK interest rate scenarios

Piggy banks
Reuters

A rate rise "around the turn of the year" would be likely, if the UK votes to stay in the European Union, says Vicky Redwood from Capital Economics.

"A vote to leave would take a near-term hike off the agenda," she adds.

"The Committee would have to balance a weaker economy versus the inflationary effects of a drop in the pound. Perhaps most likely is that rates would just stay on hold for a further prolonged period, " according to Ms Redwood.

Pound continues to fall

Pound coins
Getty Images

Sterling has slipped after the Bank of England's remarks that the pound would "fall further, perhaps sharply" were the UK to leave the European Union.

The pound is now down a cent, 0.7%, so far today to $1.41, as fresh polls show the Leave vote in the lead.

The FTSE 100 has shown little movement since the Bank's remarks, although it is down 0.6% to 5927.60 points, dragged down by weak mining and financial shares.

BoE: Uncertainty causing delays to investment

Mark Carney, Bank of England Governor
PA

The Bank of England noted that uncertainty over Brexit was disrupting the economy.

While consumer spending has been solid, there is growing evidence that uncertainty about the referendum is leading to delays to major economic decisions that are costly to reverse, including commercial and residential real estate transactions, car purchases, and business investment."

Bank of England minutes

BoE: Brexit 'increasingly likely' to cause pound to fall

The Bank of England has also released minutes from its meeting on 15 June.

Policy makers said that it was "increasingly likely" that the pound would fall further, if Britain was to leave the European Union.

In the weeks since the May Report, an increasing range of financial asset prices has become more sensitive to market perceptions of the likely outcome of the forthcoming EU referendum. On the evidence of the recent behaviour of the foreign exchange market, it appears increasingly likely that, were the UK to vote to leave the EU, sterling’s exchange rate would fall further, perhaps sharply."

Band of England minutes

BreakingBank of England holds rates

As expected the Bank of England has kept interest rates on hold at 0.5%.

Swiss National Bank could cut rates further

Euro - Swiss Franc
BBC

Switzerland's main interest rate is already at minus 0.75%, but the Swiss National Bank could cut rates even further into negative territory if necessary, its chairman said on Thursday.

The Swiss franc is seen as a safe investment in times of uncertainty, and on Tuesday it hit 1.0787 against the euro - its highest level for the year. The SNB is keen to stop the franc rising too far.

The chart above shows the last twelve months and you can see how the euro has weakened over the last few weeks.  

SNB chairman, Thomas Jordan, also said that if Britain voted in favour of leaving the European Union next week, the bank would review its monetary policy and would look at its forecasts for inflation and growth.

Uber launches UK food delivery

Uber Taxi
Reuters

As minds start to drift towards lunch, here's a food themed post.

Taxi-booking app Uber has announced it is launching a food delivery service in the UK.

The Uber Eats app will deliver food from over 150 restaurants - starting in London.

The service takes on the likes of Deliveroo and Just Eat.

William Hill shares fall on 'bleak' warning

William Hill horseracing banner
William Hill

Bookmaker William Hill is one of the biggest fallers on the FTSE 250 this morning after an analyst warned the company faces a "bleak outlook".

Shares dropped 4% following the analysis from Investec. 

The UK's biggest retail bookmaker is being hurt by management upheaval, tighter regulations, tech issues and new measures to help problem gamblers, Investec said.

Lloyds wins £3.3bn bond dispute

Lloyds Bank Limited sign
Getty Images

The UK's highest court has ruled in favour of Lloyds Banking Group in a dispute that traces its roots back to the financial crisis.

Lloyds won the Supreme Court case against investors who said the UK bank should not be able to redeem £3.3bn worth of bonds.

The high-interest bonds were issued shortly after the bank was bailed out by the government in late 2008.

Lloyds will save an estimated £800m by buying back the bonds, some of which paid annual interest of up to 16%.

'No final decisions' on PPI deadline

The Financial Conduct Authority (FCA) has responded to reports that it "caved in" to demands from banks, who want a two-year deadline on mis-sold payment protection insurance (see earlier post). 

An FCA spokesperson said:

Our consultation on whether to set a deadline on PPI complaints included a proposed communication campaign with a range of elements. We are currently considering the responses we received during our consultation and we have made no final decisions yet."

Retail sales rise 'due to falling prices'

Strong growth in retail sales in May has only been made possible by rapid price falls, according to Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

It also showed shoppers "aren't paying much heed to warnings that the economy could nosedive if the UK opted for Brexit next week", Mr Tombs says.

Clothes purchases rose 4.3% in May, as it turned warmer after the unseasonably cold weather in April, and department store sales increased by 1.1%. 

UK retail sales surge in May

Westfield shopping centre
Getty Images

UK retail sales volumes rose 0.9% in May, compared with the previous month, a bigger jump than was expected.

They were also 6% higher than a year before, as shops continued to grow strongly after a marked recovery in April - the ONS figures show. 

The average prices in shops (including petrol stations) fell by 2.8%.  

Warning over British Steel pension plan

Tom McPhail, head of retirement policy at Hargreaves Lansdown, writes:

The proposed changes may well be the right thing to do for the employees of British Steel and for their pensions, they may also allow the business to achieve a sustainable future as a going concern. For the government though, it will be hard to ring-fence this decision and to avoid this case being invoked in the future by other businesses in a similar position. In light of issues being raised in the context of the BHS pension scheme, there is a strong argument for a considered review of the pension scheme funding, of trustee responsibilities and of trade-offs between guarantees and costs in final salary pension schemes.”

British Steel pension trustees propose 'modifications'

Tata Steel workers
EPA

The trustees of the British Steel Pension Scheme (BSPS) are proposing 'modifications' to benefits as a way to keep the scheme out of the Pension Protection Fund, which would result in cuts in benefits of at least 10% for 58,000 members.

The pension scheme is a major obstacle in the effort to find a buyer to save Tata Steel's UK operations.

But changing the benefits would involve a change in laws designed to protect pensions.

More detail on the trustee's proposal can be found here.

This is from those plans.

The trustee's proposals involve modified future pension increases that, for all members, are at least as good as the increases that would apply to PPF compensation, and better for most. There would be no benefit reductions.

Bank stocks drop further

It's another tough day for bank shares. The Euro Stoxx index of Europe's bank shares is down 2.4% on the day and 11.3% in the past week.

Deutsche Bank shares have hit their lowest ever level, while Barclays, Lloyds and RBS are all down on the FTSE.

All week markets have been concerned with record low interest rates and Brexit risks, and banking stocks are seen as particularly exposed to these risks.

Darling: Vote Leave attempting to 'muzzle' Carney

Former Chancellor of the Exchequer Alistair Darling has responded to a letter from an MP on the board of Vote Leave suggesting the Bank of England cannot comment in the final days of the EU referendum campaign.  

This is a blatant attempt to muzzle a respected independent voice. The Bank of England is independent, the Governor is independent and he has a duty to say what he thinks. It is very clear the Leave campaign doesn't want people to hear what the Bank has to say on the most critical issue facing our generation because they don't like its conclusions."

Alistair DarlingFormer Labour Chancellor

Carney's letter to Leave campaigner Jenkin

Here is the Bank of England Governor's reply to suggestions he cannot comment on the EU referendum in the final run-up to the vote.

The version below is a bit small, but you can click here for the full letter.

Again, the main quotes are in Kamal's story.

Mark Carney letter page 1
BBC

MP letter to Carney

A copy of the letter from Bernard Jenkin MP, chair of the Public Administration committee, to Bank of England Governor Mark Carney.

You can see the key quotes in Kamal Ahmed's exclusive story here.

Letter from Bernard Jenkin MP to Bank of England Governor
BBC
Letter from Bernard Jenkin MP to Bank of England Governor
BBC