Markets buoyed by optimistic economic data

Developments in the Eurozone with the Greek finance minister announcing a date for the start of debt-reduction talks for his debt-encumbered country. Helena Smith reports from Athens:

Barely two months before euro elections a crucial test for the Greek government the countrys finance minister Yannis Stournaras has pinpointed a date for the start of all-important debt reduction talks. The economics professor, a technocrat who has handled the portfolio for the best part of 1o years, said Brussels would begin tackling the root of Greeces economic woes at the next but one eurogroup of euro area finance ministers, currently scheduled for June 19.

Our aim is [the achievement] of even a slight reduction of interest rates and the deferral of debt repayments. That [amounts] to a small haircut, he told Skai News. Greeces debt load is projected to reach 176% of its GDP this year. Before it began being propped up by emergency bailout funds from the EU, ECB and IMF in May 2010 it stood at roughly 120%.

Positive US manufactured goods data and easing tensions in Ukraine, not to mention continuing talk of possible Chinese economic stimulus helped markets move higher. However the UK market was held back by news of the government’s £4.2bn sale of shares in Lloyds Banking Group, meaning the leading index lost most of its early gains. The final results were:

The FTSE 100 finished 0.41 points or just 0.01% higher at 6605.30

Over in the US and more Federal Reserve member comments:

Plosser sees QE coming to an end in the fall sometime Timing of rate hikes depends on the state of the economy ^CT

Feds Plosser: Rate rise timing will depend on state of economy; US economy is in a pretty good place and shld continue in its current vein

Fed’s Plosser: Sees QE ending some time in the Autumn. NB Plosser is a voting member this year

Fed’s Plosser on the wires : – says sees jobless close to 6% by year end – economy in a pretty god place – QE to end in the fall sometimes

And with the – brief – discussion on pensions it is all over.

If you want to watch the whole session, it is available to replay here.

Using pension pot to pay off mortgage rather than buy Lamborghini is better?

Chote says relative merits of this down to parliamentarians not him (reference to pensions minister Steve Webb’s comments)

Now just six minutes for savings and pension. Too much borrowing not enough saving?

Chote says we don’t take the view of an optimum level of the savings ratio.

It is said £4bn could be raised by accelerated tax avoidance scheme, what work have you done?

Chote said the original estimate came from HMRC, make assumptions on HMRC win rate (assume 80%), how many people have paid money but still in dispute.

Impact on output gap if you had stuck to cyclical indicators?

Chote said would have taken most of the room for manoeuvre out with regard to the mandate. Estimated £20bn figure is probably close, says Chote.

Question on inflation at the end of the year.

They agree on 2%-ish.

Still some confusion about the 1.9m figures and how many are migrants.

Chairman Andrew Tyrie says perhaps this could be pursued in written form.. clearly keen to move on. He says he has promised to close by around quarter to (not clear which hour though!)

Steve Nickell of OBR says a million new employees up to 2018 – significant number will be migrants

Where are the 1.9m new workers you predict coming from, asks John Mann?

Chote and Nickell look a little nonplussed.

John Mann appears to catch OBR unawares with question on what will cause employment growth

Nickell says that in future forecasts we will say it will get back to its original trend level. We are not going to argue there has been a permanent shift in growth level.

More a question of the length of time it’s taking rather than end result?

OBR forecasts imply productivity will not recover to pre-crisis levels, is this a supply side problem?

Chote agrees, with growth of GDP in decline for some time, have chunk which will never come back.

Productivity is stagnating, are we closer to knowing why?

Chote says not really. Problem of younger firms not getting capital they need could be one constraint and would hope this could improve.

On productivity, Chote says an improvement in this is crucial to recovery.

Does house price growth in greater London pose a threat to economic stability?

Nickell says wouldn’t think so, Chote says a lot of London growth is not mortgage driven but overseas buyers.

Do your forecasts agree with others there is not a housing bubble?

Chote says the pick up for demand in housing has been due to unresponsive supply, although that is not to say there may not be some minor bubbles.

If the government cuts go ahead, quite a bit of output will be taken out of the UK economy, are you confident that will be taken up by private sector?

Chotes says, oh yes. The day to day running costs of the public sector have been a drag on economy.

What would be an ideal direction of travel for savings ratio?

Steve Nickell said before the crash it was too low. One which is positive and doesn’t change from one year to the next is probably a good thing.

Is recovery basically built on household consumption?

Chote says there is a distinction between the housing market which is driving the balance sheet story and consumer spending, where it is more important when people’s real incomes start to rise.

Why does the OBR think the household savings rate will fall from 7% to 3% in 2017? Why are households so enthusiastic to save less?

Chote says the rate of decline will slow down, but it will take time for incomes to pick up (to make up the difference).

Why is business investment at 11% of GDP a reasonable estimate?

Investment is low traditionally in the UK, and this forecast would still leave us with a modest rate compared to OECD averages.

What are the factors holding back investment?

Chote says for some, smaller firms, it is access to finance.

And we’re back.

A question on the effects of the Bank of England raising rates before the OBR judges it sensible with regard to the output gap.

Questioned on the disappointing trade performance, Chote says that is partly due to the fact it has taken time for our European partners to see a pick up in their economies.

And with the MPs leaving for a vote on the welfare cap, there is now a recess which is expected to last some ten minutes.

What about the sustainability of the recovery?

Chote says it would need a pick up in real income growth, and this is implicit in its forecasts.

Robert Chote says earnings should start outstripping inflation this year – but not sure about productivity

Pressed on why Bank is 50 basis points more optimistic, and what the OBR is seeing the Bank is not, Chote says they don’t look at it like that. Both look at the data and draw conclusions.

Chote says that while growth is clearly improving but they still expect it to slow next year. The pickup in consumer spending was driven more by people reducing their savings than a pick up in real incomes.

Question about the OBR’s growth forecast of 2.7% and why it is towards lower end of range of forecasters, with the Bank of England more optimistic.

Chote says different people have different reasons for being pessimistic. The Bank is more optimistic, it looks at the pattern of past revisions and makes adjustments which the OBR does not.

Chote says the OBR compares forecasts with other forecasters and had a wider gap than most previously, but in the last few surveys, it was smaller than average.

Chote says the OBR had assumed for some time that the growth rate of GDP would pick up.

He said firms’ answers on capacity utilisation were consistent with boom conditions, which looking at the wider economy was not obvious. So the OBR would look at a range of indicators.

The hearing is underway, slightly delayed by private business, says chairman Andrew Tyrie.

Firstly OBR chairman confirms to Tyrie there was no political interference in its work.

Another Treasury hearing into the budget will take place shortly, with the Office for Budget Responsibility up before a select committee led by Andrew Tyrie. Those due to appear in around ten minutes are:

Robert Chote, Chairman, Office for Budget Responsibility

Markit’s chief economist has looked at what the latest US data might mean for the forthcoming non-farm payroll numbers:

Weak US services PMI employment index means both flash PMIs signal c+130k #NFP in March

Shares of Candy Crush maker King Digital Entertainment fell on their first day of trading in New York.

The shares of the London-based company dropped as much as 15% after its bosses rang the opening bell at the New York stock exchange.

King has started trading on NYSE at $20.50, below its $22.50 offer

US shares are up and there’s positive economic news to support the rise.

The Dow Jones and S&P 500 indices both rose about 0.3% in early trading. US durable goods orders recovered in February and a "flash" purchasing managers index (PMI) of manufacturing and services rose in March.

Orders for long-lasting U.S. manufactured goods rebounded in February and shipments snapped two straight months of declines, providing fresh signs the economy was shaking off some of its winter gloom.

US Flash Services #PMI at 55.5 in March, up sharply from Februarys four-month low of 53.3

Facebook’s $2bn purchase of Oculus has made the first three months of this year the biggest first quarter for technology mergers and acquisitions since 2000, Thomson Reuters says.

Great news except that in March 2000 the dotcom bubble burst and many feted companies turned out to be duds.

Facebooks Oculus acquisition pushes Tech M&A to highest annual start since 2000, as value reaches $65.2 billion so far in 2014.

Facebooks $2.2bn offer for Oculus boosts High Tech M&A to $65.2bn so far in 2014, the highest year-to-date total since 2000

Candy Crush fans and there are many can watch their favourite game’s creators opening the New York Stock Exchange live!

To see them ringing the NYSE bell on a livestream, click here at 9:25am UK time.

King, developer of the blockbuster smartphone game Candy Crush, will ring the opening bell for the New York Stock Exchange this morning.

The most highly valued British firm to emerge from the digital technology boom, King will be worth $7bn when its shares begin trading this lunchtime.

The Bank of England and People’s Bank of China have agreed a deal on clearing and settling renminbi trades in London. It’s the first such agreement China has made outside Asia and George Osborne claims it puts the City in the lead to be a trading hub for the Chinese currency.

The central banks will sign a memorandum of understanding on March 31, paving the way for the appointment of a clearing bank for the renminbi, also known as the yuan, in London.

Just 20 hours after the old headquarters of the busted Anglo Irish Bank was turned into a Starbucks on Dublin’s St. Stephen’s Green, the trial of three of its former executives continues, Henry McDonald reports from Dublin.

Independent City analyst Louise Cooper has written an analysis of SSE’s decision to freeze household energy bills till 2016.

Cooper is, to say the least, sceptical about the energy companies’ predictions of economic disaster if there was a price freeze. She gives credit to Labour leader Ed Miliband for putting pressure on them by pledging to impose a freeze in the absence of a tough regulator.

What this shows is that high energy prices were not necessary. If SSE can fund price freezes from running its business more efficiently, without substantially damaging its profits, then why hasnt it done so before? My answer would be because it was a cosy oligopoly with a sleepy regulator. In such industries there is no cut throat competition endlessly driving down prices. The industry were more than happy to keep increasing prices year after year and blaming green taxes and wholesale costs (sanctioned by OFGEM and Westminster). None of the big players wanted to upset the status quo. It took Miliband to ensure that the industry and Westminster are now beginning to care about lowering prices (although still not as much as their consumers).

The FTSE 100 index is up a healthy 0.5%, led by Standard Life, which has announced a £390m deal to buy asset manager Ignis.

Legal & General, which unveiled a £3bn annuity contract for the ICI pension fund, and other insurers hit hard by the Chancellor’s pension reforms, were also among the biggest risers.

German consumer confidence has held steady at pre-financial crisis levels, in line with economists’ forecasts.

The poll by market researchers GfK matched the highest reading since January 2007. However, the survey was carried out before the Crimean crisis escalated earlier this month.

German consumer morale held steady going into April as shoppers were more upbeat about the outlook for Europe’s largest economy but their mood could worsen if the Crimea crisis spreads and leads to tougher sanctions from the West, GfK said.

The market research group’s forward-looking consumer sentiment indicator, based on a survey of around 2,000 people and published on Wednesday, was flat at 8.5 going into April. It matched the highest reading since January 2007 and was in line with the consensus forecast in a Reuters poll.

There has been a run on local banks in Sheyang county in eastern China, according to Reuters, amid rumours over solvency problems. Sheyang’s governor told savers there is no need to panic. The banks themselves took the unusual measure of stacking their notes up in the windows to reassure the public (see pictures). "The governor, Tian Weiyou, said the bank would ensure that there would be sufficient funds to pay every depositor. He also urged people not to spread or believe rumours."

In the US, 21st Century Fox has made Lachlan Murdoch non-executive co-chairman and promoted his brother James to be co-chief operating officer.

They are the sons of Rupert Murdoch, who founded News Corp and last year split the group into the 21st Century Fox entertainment group and a new, smaller News Corp to house the publishing business.

We have many challenges and opportunities ahead, and Lachlan’s strategic thinking and vast knowledge of our businesses will enable me, as executive chairman, and the company as a whole to deliver the best outcomes on behalf of our stockholders, employees and customers.

The Financial Conduct Authority has fined Santander UK a hefty £12.4m for giving customers slipshod investment advice.

The FCA’s account of Santander’s conduct is pretty damning. Advisers didn’t check properly on customers’ personal circumstances or how much risk they wanted to take, new advisers weren’t trained properly etc.

Customers trusted Santander to help them manage their money wisely, but it failed to live up to that responsibility. If trust in financial services is going to be restored, which it must be, then customers need to be confident that those advising them understand, and are driven by, what they need. Santander let its customers down badly.

The government’s stake in Lloyds Banking group has fallen below 25% after today’s sale of 7.8%, raising hopes the bank could be fully back in private investors’ hands before the 2015 election.

This is what George Osborne had to say:

This is another step in the government’s long-term economic plan to deliver a more secure and resilient economy. It is another step in repairing the banks, in reducing our national debt and in getting the taxpayer’s money back.

Carpetright has issued yet another profit warning. It’s the third time in six months the retailer has had to guide down City forecasts.

In January, the Netherlands was the big problem but today Carpetright has said hoped-for growth in the UK hasn’t materialised.

In our last trading statement, we reported that like-for-like sales in the UK were volatile, and this remains the case. Nevertheless, based on previous experience we had expected to see some recovery as UK housing transaction volumes improved. In the event, this has yet to materialise and the momentum established in the third quarter was not sustained.

SSE, the energy supplier, has promised to freeze gas and electricity prices for its 7 million customers until 2016 and will split its wholesale and retail divisions in an effort to simplify its business.

The company, formerly called Scottish and Southern Energy, said employees would face compulsory redundancies from job cuts designed to save £100m a year.

Lord Davies of Abersoch is presenting an update on progress towards his target of 25% female representation on boards.

As we report today, at the current rate companies will miss the target by Davies’s target date of March next year. Davies, the former trade minister and boss of Standard Chartered, set the target based on evidence that more women on boards lead to better decisions.

With Annet’s appointment the board comprises four women and five men, of which four are based in the UK, three in Continental Europe, one in Turkey and one in the US, who have a broad range of skills and experience that are relevant to our business.

Martin Weale, one of the Bank of England’s nine ratesetters, has given an upbeat interview to the Reading Post.

Weale, on a visit to Berkshire, said the economy was looking "considerably better" and that when rates rise they would probably do so gradually.

My sense is things are going quite well. That looking at the evidence, the economy is growing in a way which is quite different from a year ago.

As we wrote today, the Government has sold a 7.8% stake in Lloyds Banking Group to raise £4.2bn.

George Osborne has said the money will be used to pay off the national debt. Here are some more details courtesy of Reuters:

Britain’s sale of a 4.2 billion pound ($6.9 billion) stake in Lloyds Banking Group LLOY.L was 1.7 times subscribed at the sale price of 75.5 pence a share, a person familiar with the matter said.

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

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