Rolling business and financial news, as Germany's top central banker says governments must 'wake up' and keep reforming.
Latest: UK manufacturing output hits three-year high
Weidmann: interest rate cuts were right thing to do
ZEW chief: ECB cheap money creates dangers
World markets hover near record highs
Greece falls further into deflation
1.28pm BST
City economists have been digesting the news this morning that Britain's economy is almost 5% bigger than we thought, my colleague Katie Allen explains:
The Office for National Statistics has been reworking its GDP calculations to give a better picture of the economy. This includes the Europe-wide work on the 'shadow economy', such as drug-dealing and sex work.
On paper the economy is £65bn bigger which is massive. But it is purely an accounting treatment. These activities have always been there (particularly research and development activities), they just werent necessarily taken into account in GDP previously".
In isolation, if the economy is 4.6% bigger and nothing else changed, the public finances would look much better since we tend to look at borrowing relative to GDP or debt relative to GDP. That would be the equivalent of public finances alchemy but we know that the ONS is going to adjust the way it accounts for debt as well and this is going to be revised higher so there is no free lunch here.
Yes that is 1998 as we wonder if The Daily Mash is now calculating this section of the UK national accounts. In these times it is increasingly difficult to tell spoof from reality. There is of course the issue of whether one should count illegal activities full stop. Obviously there is a moral hazard issue but also there are other implications as how exactly would you go about taxing it?
Coming nominal GDP revisions. Massive to level; minor to trends pic.twitter.com/zFhiIDvREP
1.00pm BST
Cyprus is taking a step closer to normality after the trauma of its 10bn bailout in 2013, by hiring bankers to discuss the possibility of issuing sovereign debt again.
The issuer has mandated Deutsche Bank, Goldman Sachs, HSBC, UBS and VTB Capital to arrange a series of fixed income investor meetings in Europe ahead of the deal, Reuters says.
That Cyprus is even considering a bond deal underscores how stresses in financial markets have eased, as record-low interest rates have forced investors to seek riskier assets.
12.24pm BST
Back in the stock market, and BSkyB and BT's share prices are both suffering as the battle to win new broadband and TV customers intensifies.
BSkyB opened up a new front this morning, launching Sky Sports 5 (count 'em!) and saying that every new customer will be offered free broadband for two years. That could tempt customers away from BT Sport.....but the City isn't too impressed.
BSkyB has launched a new attacking move against BT but seems to be scoring a bit of an own goal as far as the City is concerned.
Champions League deprived BSkyB (from 2015) hits back v BT with free broadband offer for those taking new sports channel. Shares down.
Not sure how the addition of live Dutch football will lure customers to BSkyB. Free broadband might, but that will hit revenues.
12.14pm BST
If you wanted further proof that the eurozone bond rally is red-hot, then check this out.
Greek five-year bonds are changing hands at a yield, or interest rate, of just 3.95% this morning. That's below the equivalent yield on New Zealand five-year bonds (trading at 4.01% according to my Reuters box)
Shocked that financial media has not yet realised Greece 5Y ylds trading less than New Zealand this morning, 3.9% vs 4.01%. #bondmarket101
11.45am BST
ICAP has confirmed that the European Commission has accused it of breaching antitrust rules (see 11am), and vowed to fight the charges "vigorously".
Here's the full statement released to the City:
The Company today received a Statement of Objections from the European Commission (EC), alleging that ICAP acted as a facilitator to breaches of EU competition law by certain banks in relation to Yen Libor for isolated periods between 2007 and 2010.
These allegations relate to the same underlying matters that ICAP Europe Ltd, one of the Group's Global Broking subsidiaries, settled with the FCA and CFTC in September 2013.
11.00am BST
There are developments in Brussels' inquiry into the possible rigging of financial benchmarks, involving ICAP, the City brokerage.
Reuters reports:
The European Commission has told broker ICAP that it may have broken antitrust rules by facilitating cartels for interest-rate yen derivatives, the European Union's antitrust enforcer said on Tuesday.
"The Commission has concerns that ICAP may have been involved in cartels concerning yen interest rate derivatives as a facilitator," it said in a statement.
10.46am BST
Greece has slid deeper into deflation, according to new data released by its ELSTAT statistics body today.
The Greek consumer prices index shrank by 2.1% on an annual basis in May, with prices falling by 0.6% compared with April.
10.17am BST
IHS economist Howard Archer says today's UK industrial output data shows that Britain's manufacturers are helping to drive growth.
The fact that manufacturing output has expanded month-on-month for five successive months testifies to the solidity of the sectors upturn.
This fuels hopes that the sector can make a sustained contribution to balanced UK growth.
9.52am BST
Britain's manufacturing sector has posted its biggest annual rise in output since the start of 2011, suggesting the UK economic recovery may be broadening out across the economy.
Manufacturing output rose by 4.4% between April 2013 and 2014, the biggest annual rise since February 2011.
More recently, all members...saw growth in manufacturing output in Q1 2014, however, output remained below their respective predownturn peaks, with Italy, France and Japan remaining more than 10% below, whereas the UK remained 7.6% below.
The USA was the closest member to its predownturn peak at just 2.6% below.
9.33am BST
Germany's stock market has climbed back into positive territory to hit a new record high.
The index is up 0.14% this morning at 10,022 points -- clearly ZEW chief Clemens Fuest's warning about cheap money fuelling a bubble (see here) didn't rock the Frankfurt stock market.
Dax fresh record high
9.28am BST
We've seen some mildly encouraging eurozone economic data this morning, suggesting factories in France and Italy bounced back in April.
French industrial production rose by 0.3% month-on-month in April, and March's reading has been revised up to -0.4% from -0.7% initially.
9.21am BST
Meanwhile Greecee's deputy prime minister, PASOK chief Evangelos Venizelos, reportedly spent last last night in hospital after suffering stomach pains.
The head of the Hippocratio Hospital's cardiology unit, Christodoulos Stefanidis, told Greece's Skai TV that:
"It is related to gastroenterological disorders. He checked into our hospital for precautionary reasons."
9.15am BST
Lots happening in Greek politics today, alongside last night's cabinet reshuffle.
The leader of Greek opposition, the left-wing Alexis Tsipras, is heading to Frankfurt where he's expected to meet with ECB president, Mario Draghi.
#ECBs Draghi & Curé Set To Meet With #Greece's Tsipras Today, Discussions To Focus On Current Developments In Greece Spokesman
9.03am BST
Here's more details of Jens Weidmann's interview about the ECB's historic stimulus measures (see more here) from the Reuters terminal:
Weidmann, president of Germany's Bundesbank, said that low inflation rates since 2013 had increased the risk that further negative surprises could de-anchor the ECB's long-term inflation expectations.
"The monetary situation is different to what it was two or three years ago," he said. "The medium-term inflation outlook is significantly below our definition of price stability."
8.57am BST
Philippe Delabarre, an analyst at Trading Central in Paris, reckons stock markets will head higher through the summer, predicting:
"On a short-term basis, the momentum could slow down...But this is not going to prevent the continuation of the rise."
8.56am BST
European stock markets have inched down in early trading.
It's led by the FTSE 100 which has fallen 27 points, or 0.4%, to 6848. Germany's DAX has dipped back through the 10,00 mark (having closed there for the first time ever last night).
8.38am BST
One of Germany's top economists has warned that the European Central Bank could create a new crisis through its stimulus measures -- even as Jens Weidmann was defending it.
"I am troubled by the danger that the ECB creates with its policy of cheap money.
"We have all the ingredients of a bubble: The prices of real estate and on the stock markets rise on and on, and on the bond markets profits* are falling despite high risks."
The purchase of corporate bonds, I see not critical, provided that credit is true.
#ZEW head Fuest tells @handelsblatt concerned about build up of bubbles due to #ECB expansionary monetary policy 1/2
#ZEW head Fuest tells @handelsblatt sees probability of 95 pct that #ECB will do #QE - but for now Fuest says sees no risk of deflation 2/2
8.15am BST
Germany's top central banker, Jens Weidmann, has defended the European Central Bank's decision to impose negative interest rates on the region's banks, and offer them hundreds of billions of euros in fresh cheap credit..
"The interest rate cuts were a response to the unsatisfactory inflation outlook.
"That we took unconventional measures is both down to the fact that we have almost used up the room to cut rates, and that we wanted to ensure that our expansive monetary policy also came through to the real economy."
*WEIDMANN: NEED TO REMAIN VIGILENT TO POTENTIAL OVER-REACTIONS // so is that the new name for carry trades?
It's all over the news, but it's more impressive on the charts. 10Y Spain yield below UST yield. Thanks, @ecb. pic.twitter.com/52FD1RTGZ7
8.10am BST
Good morning, and welcome to our rolling coverage of the financial markets, the world economy, business and the eurozone.
Coming up today.... financial markets are hovering around their record highs, as the long rally refuses to peter out.
There has been plenty of talk recently around the measure China is taking including increasing spending on railways and broader infrastructure along with lowering reserve required ratios.
Confidence might just be growing that China will hit its growth target after all, not that many ever doubted this will be the case.
Brussels Econ Forum this a.m. features @ollirehn, Jorg Asmussen, #IMF Euro chief Reza Moghadan. Also hear moderator of 1st panel v handsome.
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