FTSE 100 tumbles as investors await Janet Yellen's Jackson Hole speech

Pharmaceutical companies were among the biggest casualties on the blue chip index after comments from US democratic presidential candidate Hillary Clinton sparked fresh concerns about a serious clampdown on drug prices industry-wide.

US firm Mylan found itself at the centre of the storm after Senators Susan Collins and Claire McCaskill called for an “urgent briefing” with the group’s chief executive regarding price increases of its severe allergy treatment drug EpiPen. However, pharma stocks came under pressure when Clinton on Wednesday night said there was “no justification” for the 480pc price hike in the product. Just a day later Mylan said it would reduce the patient cost of the treatment, nevertheless, investors remained cautious.

Jasper Lawler, of CMC Markets, said: “Her [Hillary Clinton’s] statements reaffirm a fear in the industry that a Clinton presidency would see a serious crackdown on pharmaceutical price gouging.”

In its wake, shares in Hikma tumbled to the bottom of the FTSE 100, down 78p, or 3.5pc, to £21.50. Shire fell 123p to £49.02 and AstraZeneca dropped 69p to £20.11.

On the wider market, investors were on standby mode as they awaited Fed chair Janet Yellen’s speech at Jackson Hole on Friday for any hint on the timing of the next US rate rise. The FTSE 100 tumbled by 18.88 points, or 0.28pc, to 6,816.90.

Irish building materials supplier CRH bucked the trend after it announced its first dividend hike in seven years. It also unveiled half-year pre-tax profits of €407m, compared with €63m a year ago, thanks to continued momentum in the US and integration of recent acquisitions. Robert Eason, of Goodbody, said: “Management has got the balance sheet into a position that it is likely to be doing more M&A, especially in 2017.” The FTSE 100 stock climbed to the top of the blue chip index, up 71p, or 2.9pc, to £25.43.

Elsewhere global advertising giant WPP continued to benefit from better-than-expected half-year results when a slew of brokers hiked its price target, including JP Morgan, Deutsche Bank, Natixis, and Societe Generale. Chris Collett, of Deutsche Bank, said the investment bank found the management presentations “reassuring”, as key messages included potential for further margin improvement.

Separately, a German weekly magazine WirtschaftsWoche, named Kantar, a unit of WPP, among three possible suitors interested in German market research firm GfK. Shares jumped 23p to £18.03.

On the mid-cap index, Entertainment One suffered its sharpest fall since December last year, down 35.7p, or 14.2pc, to 215.1p after ITV withdrew its proposal to buy the Peppa Pig maker. The British broadcaster said it “has a clear view of the value of the business” but it appears “this value is different to the level at which the board of eOne would currently engage in a formal process”. ITV’s 236p per-share cash offer was rejected two weeks ago.

Online takeaway food company Just Eat also found itself among the mid-cap laggards on the back of a bearish broker note. Barclays declared it was “full for now” and lowered the stock’s rating to “equal weight”. Gerardus Vos, of Barclays, said: “While we still see some upside to Just Eat’s conservative guidance as it continues to outmanoeuvre the competition, this is likely to be at a slower pace.” The investment bank noted that the rate of growth of UK orders is dropping, adding that “with a tough third quarter comp, this could come under increased scrutiny”. The FTSE 250 stock tumbled 23.5p to 545.5p.  

On the other side, Playtech shares rose 28.5p to 928p after it announced a €150m special dividend. The gambling technology company also said it has “a strong pipeline of M&A targets”, posting revenue growth of 11pc in the first half of the year. In its wake, Canaccord Genuity nudged up its price target from £11 to £11.25 as it views the shares as “the stand-out value play” in the online gaming sector.

Elsewhere, a rating downgraded caused shares in support services group Carillion to fall 14.5p to 281.7p. Although the mid-cap said it was on track to meet full-year expectations on Wednesday, JP Morgan slashed its rating to “underweight” amid slowing growth and a weak performance in the Middle East.

Luxury retailer Jimmy Choo put its best foot forward, 6.3p, or 5.3pc, higher at 124p, after it reported revenue growth of 9.2pc on a reported currency basis, or 3.8pc on a constant currency basis, in the first half of the year. It also said it enjoyed a strong start to the second half of the year thanks to the post-Brexit pound weakness.

Finally, its peer Burberry dipped 20p to £13.33 as a share sale by company directors dampened investors confidence in the luxury brand. Chief executive Christopher Bailey, who will be replaced by Marco Gobbetti of Celine next year, pocketed £253,500 after he offloaded 18,750 shares at £13.52 a piece. The group’s head of Asian operations Pascal Perrier also sold 72,162 at a price of £13.66 a share.

On that note, it's time to close up. I'm back again tomorrow with more market updates.

Property investors fled from Britain’s property funds in the wake of the Brexit vote, taking £792m out of the sector in July.

A series of commercial property funds closed their doors to stop investors taking their cash out, in fear that it would force them to sell off buildings at fire-sale prices.

The figures from the Investment Association underline the scale of the sell-off in the weeks after the vote, which were prompted by fears that the property market could be hit by the referendum.

At the same time mortgage lending levels fell as buyers hesitated after the referendum.

Banks and building societies lent £21.4bn in July, according to the Council of Mortgage Lenders (CML), down from £21.5bn in June and £21.6bn in July of 2015.

Economists believe it is another sign of a slowing market.

“While July’s year-on-year decline in gross mortgage lending was small, it is nevertheless notable that it was the first annual decline seen in more than a year,” said economist Howard Archer at IHS Global Insight.

Report by Tim Wallace (Read more here)

Legal & General, the UK’s biggest pension fund manager, has come out swinging against Sports Direct by revealing it will vote against the retailer’s chairman and all its non-executive directors at the sportswear chain’s meeting next month.

It will be the third consecutive year the largest investor in UK companies has voted against Keith Hellawell and since that time Sports Direct’s shares have more than halved. 

Sacha Sadan, director of corporate governance at Legal & General Investment Management, said that the firm will be also voting against all of the non-executive directors “as we believe that Sports Direct needs a stronger body of independent non-executive directors to ensure the business is run in the interest of all shareholders.

"We are disappointed that there have been no new non-executive board appointments in the last five years.”

Mr Sadan also confirmed that he would be supporting a resolution, proposed by trade unions, to form an independent review of Sports Direct’s labour practices.

Report by Ashley Armstrong (Read more here)

European bourses ended the trading session in the red this afternoon as investors remained on standby mode ahead of tomorrow's speech by Janet Yellen at Jackson Hole. 

At close of play: 

• FTSE 100: -0.28pc
• DAX: -0.88pc
• CAC 40: -0.65pc
• IBEX: -0.66pc

 Joshua Mahony, of IG, said: " The FTSE has suffered yet another day in the red, as markets turn increasingly pessimistic over Janet Yellen’s Jackson Hole appearance tomorrow. Unfortunately, monetary policy considerations continue to trump economic health, as a six month high for US core durable goods has served to do little to revive US markets, which are trading in the red once more." 

 It is time for the Federal Reserve to raise U.S. interest rates gradually, given progress on employment and inflation, Kansas City Fed President Esther George said in television interviews, kicking off a high-profile conference in Jackson Hole, Wyoming, with a cautiously hawkish view.

"I think it's time to move," she told Bloomberg TV as some of the world's top central bankers gathered to consider whether monetary policy needs to be reimagined in a world of persistently low rates, inflation, and economic growth. The interview was conducted on Wednesday and broadcast on Thursday. 

George, the only policymaker to dissent against the Fed's decision last month to leave rates unchanged at the fifth straight policy meeting, said she is "not convinced" that a fundamental rethink is necessary at this point.

George, who is in the minority of Fed officials, said "we can remove some of that accommodation" as long as employment continues to improve and inflation remains low and stable.

"I do think it is time to move that rate," she said separately on CNBC television on Thursday. "That doesn't mean I favor high rates. It doesn't mean I think that needs to happen rapidly. I agree (with) a gradual move in these rates."

Report by Reuters

Confirmation that Iran will join the world's biggest oil producers at their meeting in Algeria next month, coupled with a soft dollar, lifted Brent crude by as much as 1.2pc this afternoon to $49.64 a barrel. 

The dollar weakened ahead of Janet Yellen's Jackson Hole speech on Friday. While speculation heightened Opec producers may reach an output freeze agreement next month after Iran confirmed it would attend the meeting. 

However, Joshua Mahony, of IG, cautioned:  "It is worth realising that even if Iran do actually attend (not guaranteed) and even if the nations manage to agree to a production freeze (unlikely), this does nothing to reverse to severe supply and demand imbalance that continues to weigh on crude prices.

"Maintaining production at all-time highs is like a diet where you simply eat the same amount. Meanwhile, output cuts are a no go given that this effectively means surrendering market share to US producers that have been in the Saudi crosshairs for years."

Here's a look at how Brent performed today: 

Commodity prices have probably turned a corner, the boss of mining group South32 has said, as the company reported a loss in its first set of results since splitting from BHP Billiton.

While every commodity was slightly different, “the first quartile of the year probably was the bottom from what I’ve seen”, said Graham Kerr, chief executive.

“In the second quarter and a little bit in the third quarter we saw stimulus by the Chinese government. But some of the rebounds in price will ease off,” he added.

Commodity prices have enjoyed a strong start to the year with better-than-expected demand from China, the world’s biggest consumer of raw materials, which has been trying to boost its construction industry. Mr Kerr tipped metallurgical coal and silver to hold onto their gains, while predicting thermal coal and aluminium could retreat as more supply comes onto the market.

In its first year as a separate company, South32 reported a pre-tax loss of $1.5bn - a drop of 288pc on a pro-forma basis. Much of this was due to a $1.7bn impairment it recognised in February because of lower prices. Underlying earnings tumbled 39pc to $1.1bn.

Revenue fell 25pc to $5.8bn, as the average price of its commodities slumped 21pc during the year.

Report by Jon Yeomans (Read more here)

The case for the US central bank to hike interest rates is "strengthening", Dallas Fed president Robert Kaplan said this afternoon. 

In an interview with CNBC, Kaplan said: "We are making progress on employment", adding that slow progress had been made on inflation. 

He reckons the Fed should be able to lift rates for the first time since last December in the "not too distant future". 

Kaplan also sees very "good" and "healthy" financial conditions that are conducive to economy growth.

The US services sector suffered its worst rise in activity since February this month, data from Markit showed this afternoon. 

The Markit flash US services PMI business activity index stood at 50.9 in August - down from 51.4 in the previous month, amid uncertainty ahead of the US presidential election. 

Softer business activity growth was mainly linked to muted new business gains in August. Reflecting this, latest data signalled that new work expanded at the slowest pace since May and remained much weaker than its post-crisis trend. This contributed to a renewed slowdown in job creation during August, with payroll numbers rising at the least marked rate since December 2014. Some firms reported that subdued demand conditions and the need to cut costs had led to more cautious staff hiring plans and the non-replacement of leavers.

Chris Williamson, Chief Business Economist at Markitsaid: “The ongoing lacklustre economic growth signalled by the flash PMI suggests GDP growth is failing to accelerate in the third quarter from the weak 1.2pc pace seen in the second quarter. “Historical comparisons indicate that the PMI is signalling an annualised GDP growth rate of just under 1pc in the third quarter, based on the data for July and August.

“With job creation also waning alongside subdued price pressures (the August PMI is consistent with non-farm payrolls rising by just under 130,000), the survey data will fuel expectations that the Fed will be in no rush to tighten policy again. However, as anecdotal evidence from the survey suggests that business activity is being dampened by uncertainty due to the upcoming presidential election, there’s a good chance that the economy will pick up speed again after the vote, leaving a December rate hike on the table.”

Despite strong economic data this afternoon Wall Street opened in the red as investors awaited Janet Yellen's Jackson Hole speech tomorrow. 

Earlier this afternoon, data showed US durable goods orders rose 1.6pc last month - its biggest gain since January and US jobless claims fell for a straight week.

However, it wasn't enough to boost US stocks at the opening bell, as investors remained anxious on standby mode ahead of tomorrow's key event at Jackson Hole. 

At the opening bell: 

• Dow Jones: -0.14pc
• Nasdaq: -0.23pc
• S&P 500: -0.18pc

Patients fed up with long NHS waiting lists are increasingly turning to the private sector and paying out of pocket for medical procedures, helping to boost UK-listed hospital provider Spire Healthcare, its chief executive has said.

Garry Watts, who took the helm in June from his previous role as chairman when former boss Rob Roger stepped down, said Spire’s self-pay division, in which patients fund their own medical procedures, increased sales by 10pc to £85.3m in the first six months of the year.

He said the division was an important part of the overall business and was likely to strengthen further.

“Over the past four or five years we have seen mid to high single digit growth and that is partly down to the NHS struggling," he said. "But even if the NHS is performing to its targets, many people don’t want to spend 18 weeks on a waiting list and would rather pay to get into a private hospital sooner, at a time that suits them.

“Those aged 50 to 60 are increasingly of the view that the NHS is not there for them in the way that they would have ideally liked and are beginning to recognise that having an alternative is something that is acceptable, provided it works and they understand what they are paying for.”

Continue reading this report by Julia Bradshaw here

The troubled Dreamliner jet has run into fresh problems with Japanese airline All Nippon Airlines (ANA) grounding flights because of issues with the aircraft’s Rolls-Royce engines.

ANA, the largest operator of Boeing’s 787 Dreamliner, said it was cancelling services to replace compressor blades in the aircraft’s Trent 1000 engines produced by FTSE 100 listed Rolls-Royce.

Shares in the Derby-based engineer fell almost 2pc on the news that the Japanese carrier had found corrosion on  blades inside the engines.

ANA has 49 Dreamliners in services - more than 10pc of the 445 Seattle-built 787s that have been delivered so far by Boeing.

So far nine flights using the jet have been cancelled and ANA has indicated that more changes to its flight schedule are likely to follow because of the problem.

Rolls competes with US rival General Electric to supply engines for the 787, one of the newest most advanced airliners in the world, and the British company has almost 40pc of the market.

A spokesman for Rolls said: “We are aware of the situation and are working closely with ANA to minimise the effect on aircraft service disruption.”

Report by Alan Tovey (Continue reading here)

According to Citigroup - here's what to expect.  

US durable goods orders increased 1.6pc last month, data from the Commerce Department showed this afternoon. 

Here's what analysts had to say about the data release: 

Naeem Aslam, Think Marktes: 

"US durable goods data was really smashing and it has made a lot of difference with respect to what Yellen will say tomorrow. Although the element of over cooked cannot be ignored with respect to expectations, but the data released today has confirmed that we are standing on solid foundation.

"The data has made Yellen a lot more confident especially if she wants to occupy the the hawkish tone. Perhaps, she will reiterate that every meeting is a live meeting and the Fed are more comfortable. For asset class such as gold, investors could build some short positions but remember what ever she will say tomorrow especially hawkish sentiment is already priced in after this data. Although, you may experience some mor sell off but it may not be a game changer if you have a long position with longer term view."

Ian Shepherdson, Pantheon Macroeconomics: 

"We expect further sustained gains ahead, consistent with the message from the upturn in the ISM manufacturing  new orders index. Stronger capex is integral to our forecast for much stronger GDP growth in H2 and this report is a great start, though one good month is not enough. Note too that durable good inventories rose by 0.3pc in July, following six straight declines. We doubt inventories will keep rising at this pace, but a turning point is due and, coupled with very favorable technical factors, we expect inventories to contribute about +1.5pp to third quarter GDP growth."

Markets are implying a 55pc chance the Fed will hike rates at its meeting in December - compared with 50pc at Wednesday's close before weekly jobless data and durable goods data were released this afternoon. 

Attention will now shift to Fed chair Janet Yellen who will deliver a speech at Jackson Hole tomorrow and investors will be looking for hints on when the Fed will act next. 

 New orders for US manufactured capital goods rose for a second straight month in July as demand for machinery and a range of other products picked up, offering a tentative sign that a business spending downturn was starting to ease.

The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 1.6pc last month.

That was the largest gain since January and followed an upwardly revised 0.5pc rise in June. These so-called core capital goods orders were previously reported to have gained 0.4pc in June.

That was the first back-to-back increase since January 2015. Economists polled by Reuters had forecast core capital goods orders rising only 0.3pc last month.

Business spending has contracted since the fourth quarter of 2015, in part as companies slashed capital spending budgets in response to lower oil prices.

The increase in core capital goods orders comes as oil and gas drilling activity has been rising in recent months.

Still, business investment is likely to be tepid in the third quarter amid uncertainty over the global economy after Britain's decision to leave the European Union and ahead of the U.S. presidential election, economists say.

Report from Reuters

The number of Americans filing for unemployment benefits unexpectedly fell last week, suggesting the labor market was continuing to gain momentum.

Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 261,000 for the week ended Aug. 20, the Labor Department said on Thursday. It was the third straight weekly decline in claims.

Claims for the prior week were unrevised. Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 265,000 in the latest week.

Claims have now been below 300,000, a threshold associated with a strong labor market, for 77 straight weeks. That is the longest such stretch since 1973, when the labor market was much smaller.

With the labor market being viewed as either at or near full employment, claims will likely hover around current levels for a while. The job market has experienced robust hiring in the last two months and slack has also significantly diminished.

A Labor Department analyst said there were no special factors influencing last week's claims data and that no states had been estimated.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1,250 to 264,000 last week.

The claims report showed the number of people still receiving benefits after an initial week of aid dropped 30,000 to 2.15 million in the week ended Aug. 13. The four-week average of the so-called continuing claims ticked up 250 to 2.16 million.

The continuing claims data covered the survey week for August's unemployment rate. Continuing claims rose 1,000 between the July and August survey periods. That suggests the jobless rate will probably hold steady at 4.9 percent this month.

Report from Reuters

Playtech has revealed it will trim its acquisition war-chest by returning €150m to investors, sending shares in the gambling software company to record levels despite the business revealing that profits had been hit by sterling’s plunge.

Investors pushed shares in the FTSE 250 company up as much as 5pc to an all-time high of 944½p in early trade after Playtech, a key supplier to betting companies, said it would pay a special dividend of 46 euro cents a share – 40p at current exchange rates – to shareholders on December 6.

It comes on top of an interim payout that has been lifted 15pc to 11 cents  but still leaves Playtech, which was founded by Israeli billionaire Teddy Sagi, with a substantial cash-pile of about €750m that it hopes to spend buying up other businesses. 

“We’re still in discussions with certain potential companies that we would like to acquire, both in the gaming division as well as the financial [trading] division,” said Mor Weizer, Playtech’s chief executive.

Report by Ben Martin (Continue reading here)

Pizza Express sales jumped 14.1pc in the past year as appetite for Italian-style pizza among diners in Asia helped counter a “challenging market environment” in the UK.

The British restaurant chain said group sales hit £488m in the 52 weeks to June 26, boosted by opening 18 new UK restaurants and 17 in its rapidly-growing Asian markets.

Pizza Express, which has a range of supermarket products in addition to its restaurants, posted £100.3m in earnings before interest, taxes, depreciation and amortisation, up from £100.2m, but did not reveal pre-tax profits.

Despite launching a new range of supermarket pasta and gluten-free pizzas, and a home delivery tie-up with takeaway app Deliveroo, the chain failed to stem a decline in sales in its home market, where it owns around 450 restaurants.

Like-for-like sales in its British and Irish arm dipped 1.3pc against a tough backdrop for bricks-and-mortar eateries, which have been hit by lacklustre demand from diners as well as the costs of the new minimum wage.

Report by Kate Palmer (Read more here)

European bourses are in decline this afternoon with mining and pharma stocks among the biggest laggards. 

• FTSE 100: -0.18pc
• DAX: -0.93pc
• CAC 40: -0.8pc
• IBEX: -0.8pc

 Chris Beauchamp, of IG, said: "The pharma sector has knocked 20 points off the FTSE 100 , after comments from Hilary Clinton last night suggested that the candidate would look to put pressure on drug makers to cut prices. This fall has combined with an ongoing rise in sterling that has taken some of the shine off the dividend stocks that were so much in demand after Brexit. It is at least a relief to get some movement in markets after days of calm, even if that move is to the downside.

"Thinner volumes continue to amplify the moves, giving them a greater impression of weight than they deserve, but really we are all still in a holding pattern ahead of Janet Yellen’s speech tomorrow. Indeed, a drop today could  be viewed as a perfect setup for some longs into the weekend, and the merest hint of supportive monetary policy could produce a sudden rally that recovers lost ground and puts markets back on an upward trajectory." 

Only once in the past ten years has Jackson Hole been a big market mover (that was 2010 when Brenanke signaled QE2). 

Analysts at Bank of America Merill Lynch reckon this year the economic symposium has volatility potential for the following reasons: 

• Wall Street’s dependence on the Liquidity Supernova: annualized return from global government bonds YTD is 20pc, the second highest return in 30 years; current bull market in US stocks (2723 days) is second longest ever; at or close to all-time highs: global government bonds, IG bonds, HY bonds, EM debt, REITs, US stocks, staples, discretionary, industrials, utilities.
• Powerful rally since Feb lows which coincided with Yellen’s second day of Humphrey-Hawkins testimony: global stocks +21pc (led by EM & Pacific ex-Japan), commodities +27pc, HY bonds +18pc and EM bonds 13pc; in addition, Brent crude oil has rallied 65pc.
• Investor excess positioning in assets tied to “zero-rate” expectations.
• Recent Fed hints (in particular by Brainard & Bullard) that they are capitulating on their long-held forecasts of higher growth, inflation & interest rates…forecasts which continue to be stubbornly ignored by the market.
• Expectations for a dovish Fed are coinciding with macro strength in the US (most obviously in housing & consumer spending) as well as highest level of wage inflation since Jan’10.

Record low interest rates and poor returns from gilts and bonds are driving investors to look for alternative sources of steady returns, setting the scene for a golden age for infrastructure investment.

The prediction comes from Olivier Brousse, chief executive of John Laing Group, the FTSE 250 business that invests in infrastructure projects around the world ranging from power generation to prisons, and stadiums to rail rolling stock.

Global population growth and climate change means there is growing need for infrastructure, and economic conditions in the UK make the country a prime target for new investments in the sector.

Speaking as John Laing posted interim results, which showed the key measure of net asset value had risen by 8.3pc to £963.7m, Mr Brousse said: “Public private partnership investment has been subdued for some time but it is now finally growing. You can delay building new infrastructure for only so long and the need is here.

Report by Alan Tovey (Read more here)

It's been a rather subdued trading session so far this morning, as investors remain on standby mode ahead of Janet Yellen's Jackson Hole speech tomorrow. 

However, despite the absence of economic data in Europe, the US trading session should be a little livelier with the release of durable goods orders and services PMI this afternoon. 

Previewing the data release, Craig Erlam, of OANDA, said: 

"Durable goods orders offers great insight into both how the economy is functioning now and expectations for the years ahead so it really is an invaluable release. The number can be quite volatile as it only compared to the previous month but it gives some important insight into how much companies are investing.

"The numbers have been quite disappointing for most of this year which hasn’t helped convince people that the economy is in as good shape as the unemployment data would suggest and cast doubt on whether the Fed should be looking to raise rates in an environment in which companies are clearly not confident in. Another poor number this month would only cloud the issue further." 

Here's our full report  on ITV withdrawing its proposal to buy Entertainment One by Christopher Williams: 

TV has scrapped its plan to buy Entertainment One (eOne), the maker of Peppa Pig, after its initial approach was rejected as undervaluing the company.

The broadcaster said it had a “clear view of the value of the business” and that it “appears this value is different to the level at which the board of eOne would currently engage in a more formal process”.

ITV proposed a takeover of eOne at 236p per share a fortnight ago as the latest stage of its plan to bulk up its production business.

As well as Peppa Pig, eOne owns a controlling stake in the Mark Gordon Company, maker of US dramas such as Grey’s Anatomy and Ray Donovan.

The approach, which valued eOne at £1.2bn including debt, was immediately rebuffed, however. Some of the company’s major shareholders acquired stakes last year at prices substantially higher than 236p per share.

The Telegraph reported demands from one top investor that ITV increase its bid to around 284p per share, 20pc more than it proposed.

ITV said: “ITV continues to believe in the strategic logic and potential benefits of acquiring eOne but has a clear view of the value of the business, recognising that this value would need to be verified by appropriate due diligence.

“It appears this value is different to the level at which the board of eOne would currently engage in a more formal process.”

While eOne required a higher bid to open formal talks, it is understood that ITV faced tough questions from its own shareholders over the value of a takeover. While it is building a production business, most of eOne’s revenues are drawn from low-margin cinema distribution.

Continue reading here

UK retailers may have enjoyed their best sales volumes in six months, but Pantheon Macroeconomics cautioned investors shouldn't place much weight on the CBI survey. 

"The CBI’s reported sales balance picked up in August to its highest level since February, but the survey has been a very poor bellwether lately.  The balance fell in July to its lowest level since January 2012, when the official measure of retail sales leapt 1.4pc month-to-month.  

"The survey’s narrow scope—August’s survey included just 58 retailers, who reported results only for the period between July 27 and August 12—means it often gives a misleading steer. Away from the high street, there are clear signs that consumers are slowing down; falling new car registrations and declining mortgage approvals show households are shying away from big-ticket purchases. Looking ahead, we continue to expect growth in overall spending to slow sharply, as inflation picks up in response to sterling’s depreciation and firms scale back hiring." 

Despite better-than-expected UK retail sales data from the CBI, Howard Archer, of IHS, thinks the concern is that the fundamentals for consumers will "soften appreciably over the coming months", weighing down on spending. 

"Consumers are likely to face less favourable purchasing power as inflation rises and earnings growth is limited by companies striving to limit their costs. In addition, unemployment seems seem likely to rise over the coming months. Consumer price inflation seems set to rise markedly over the coming months due to the substantially weakened pound, and could very well reach 3.0pc in the latter months of 2017.

"Meanwhile, companies may well look to clamp down on workers’ pay as they strive to save costs in a more difficult environment and as imported input prices are lifted markedly by the weakened pound. Meanwhile, a likely softening labour market and reduced consumer confidence will dilute workers’ ability and willingness to push for higher pay awards even though inflation is expected to rise appreciably over the coming months. There is a very real likelihood that inflation will move above earnings growth during 2017." 

UK retailers enjoyed their strongest sales in six months in August, industry figures showed this morning. 

The Confederation of British Industry said its retail sales volumes index rose 9pc this month - its highest level since February and ahead of expectations of a slide of 12pc. 

After tumbling 14pc in July (its first reading post-Brexit), retailers appear to have recovered from an initial sales slump following the referendum on EU membership. 

Anna Leach, CBI Head of Economic Analysis and Surveys, said:

“The summer weather has brought shoppers out onto the high street with retailers reporting that sales growth has risen, outdoing expectations, although firms do expect sales growth to ease next month.

“While the fall in Sterling has boosted visitor numbers to the UK, it is likely to push up the price of imported goods over time which will mean households will be more likely to rein back spending on non-essentials.”

The volume of orders placed upon suppliers fell for a fifth consecutive month although retailers expect them to grow somewhat in the year to September.

Other key findings included: 

• 35pc of retailers said that sales volumes were up in August on a year ago, whilst 26pc said they were down, giving a balance of +9pc. This was above expectations (-12pc), and a marked improvement on the previous month’s balance (-14pc)25pc of respondents expect sales volumes to increase next month, with 22pc expecting a decrease, giving a balance of +3pc
• 26pc of retailers placed more orders with suppliers than they did a year ago, whilst 33pc placed fewer orders, giving a balance of -7pc
• 22pc of businesses reported that their volume of sales for the time of year were good, whilst 14% said they were poor, giving a balance of +8pc
• Growth in internet sales volumes accelerated in the year to August (+42pc) up from the previous month (+23pc)
• Sales volumes grew in clothing (+39pc) and non-store goods (+66pc) among others. Sales volumes for grocers were relatively flat (+3pc)
• Average selling prices fell (-5pc) for the first time since November 2015.
• Investment intentions for the next year strengthened (+15pc). The business situation was expected to improve further (+7pc).

Broadcaster ITV has announced this morning that it has withdrawn its proposal to acquire Entertainment One, putting the Peppa Pig maker on track for its worst day in since February. 

In a statement the British broadcaster said: 

"ITV continues to believe in the strategic logic and potential benefits of acquiring eOne but has a clear view of the value of the business, recognising that this value would need to be verified by appropriate due diligence. It appears this value is different to the level at which the Board of eOne would currently engage in a more formal process.

"ITV has a clear strategy to build a stronger, more diversified international business and will continue its disciplined approach to evaluating its healthy pipeline of potential investment opportunities."

Shares in Entertainment One fell immediately to the bottom of the mid-cap index, off 12.7pc at 219p - while ITV shares jumped 1.7pc to 205.2p.

Expectations that Janet Yellen will let out "a valuable hint" at tomorrow's speech at Jackson Hole about the next rate rise "is very high", Ipek Ozkardeskaya, of London Capital Group, said this morning. 

"Any comment from Yellen could be over-interpreted, overrated and could cause dramatic two-sided market volatility before the weekly closing bell.

"As Janet Yellen’s speech is the major factor driving the cross asset markets, the event risk is high and difficult to diversify. Even the flight to safety is risky, as any massive move, dovish or hawkish, could have an undesired impact on the volatility in the safe haven assets."

Returning to investors' main focus today Jackson Hole, Neil Wilson, of ETX Capital, doesn't expect much from the annual economic symposium. 

"It's not a policy meeting, nor is it meant to drive expectations for future policy decisions," Wilson said, as he reminds investors that Jackson Hole is a serious, sombre affair. 

"It’s a talking shop and we should take the goods on offer with a healthy dose of salt."

This time last year, we'd just experienced China's Black Monday - but markets are much quieter this August, so Wilson reckons investors are "latching on to anything they can". This means the economic symposium is attracting a lot more attention than it probably deserves. 

"Investors will hang on every word uttered by Janet Yellen, the Federal Reserve chair," Wilson adds. 

"The big question on the table is whether the Fed is ready to raise rates in September. Markets are currently pricing in a one-in-five chance the Fed will hike next month. This may smack of complacency and Fed officials have been keen to steer markets to accepting a rise is on the table. The economic outlook has improved a lot and some analysts think the FOMC will vote to raise rates at the September meeting.

"We can probably expect Yellen to signal the Fed’s confidence about the US economy and this could drive up expectations it will pull the trigger in September, potentially pushing up USD and hitting gold in the short-term. There could be some volatility in USD pairs around the meeting, especially with volumes down.

"Stellar jobs numbers and GDP forecasts support a hike sooner, but retreating inflation has clouded the outlook. Minutes from the last meeting showed some policymakers have said they want to see improving price growth first before further tightening.

But Yellen’s habit of keeping markets guessing with alternately hawkish and dovish remarks should be kept in mind. Indeed what the meeting will highlight is just how hard it is for central banks to normalize policy after years of accommodation.”

The pound is trading near a three-week high against the dollar this morning after economic data released yesterday showed British manufacturing exports hit a two-week high. 

Last week, better-than-expected inflation and retail sales pulled it from the doldrums - and lifted it 1.2pc for the week ending August 19. 

Today the pound is trading a little lower at $1.3218 against the dollar down, 0.14pc. 

However, it's currently up 1.1pc so far this week. Yesterday, it high a three-week high of $1.3273 - and while its edged slightly away from this level today, its still nearing three-week highs. 

Pharma stocks are among the biggest laggards today following comments from Democratic presidential candidate Hillary Clinton on price gauging in the industry. 

Mike van Dulken, of Accendo Markets, said the latest leg down followed a slide in the sector's US peers "thanks to fresh political disquiet about excessive and potentially unethical pricing of life-saving drugs". 

Clinton demanded that Mylan group lowers its outrageous price of the EpiPen, its allergy injection. 

Mr van Dulken added: "This echoes the populist swipe and US congressional challenge of Martin Shkreli, founder and former CEO of Turing Pharma which recently hiked the price of an Aids medicine by 5,000pc overnight. It also serves to strike fear into the hearts of healthcare groups and their investors everywhere."

Shares in Hikma tumbed 5.1pc to £21.15, Shire lost 4.1pc to £48.21, and AstraZeneca dropped 2.6pc to £49.49.

Jasper Lawler, of CMC Markets, reckons Clinton's comments will "continue to weigh on the healthcare sector", especially the likes of Amgen, Biogen and Celgene. 

"Her statements reaffirm a fear in the industry that a Clinton presidency would see a serious crackdown on pharmaceutical price gauging," he added. 

After German business morale unexpectedly fell this month to 106.2 from 108.3 in July and below expectations of a reading of 108.5, Claus Vistesen, of Pantheon Macroeconomics said that data was "a bucket of cold water relative to recent months' solid PMI data".  

"Overall, a reading of about 106 on the headline business climate index has been consistent with solid GDP growth in Germany, but the dip in the expectations index to 100.1, from 102.1 is ominous. We now have to be on alert for a further dip below 100, which has traditionally been a strong signal of a slowdown in the economy.

"Overall, these data also confirm our suspicion that German GDP growth is not accelerating, despite strong growth in the first half of the year. Across sectors, the main hit came from a sharp fall in retail sentiment, but confidence also dipped in manufacturing and wholesale. It was, however, stable in construction which suggests that building capex will support investment in the third quarter. The bright spot of the survey, however, was the pick-up in the separate services gauge where expectations rose. This is contrary to the message from the PMI where the business outlook is deteriorating. This divergence is not unusual, though, and the next few months’ data will give a clearer picture."

The annual economic symposium at Jackson Hole kicks off today and already attention has shifted to tomorrow's speech by Fed chair Janet Yellen - markets are hoping Yellen might indicate a clearer timeframe for the next rate hike. 

The US central bank last hiked rates last December. Ahead of tomorrow's speech, analysts are previewing the event: 

Jeremy Cook, WorldFirst: 

"Dollar continues to trade a little weaker as traders wait on tomorrow’s speech from Janet Yellen and while I think that the broad takeaways from her speech will likely see an increase in expectations of a December rate hike, the pricing out of a similar move in September will likely limit any dollar gains.

The Fed’s next hike is not going to be about containing rampant inflation expectations of course, but more that leverage and risk-taking is becoming a problem, if it isn’t already, and that those excesses need to be curbed sooner rather than later."

Naeem Aslam, Think Markets: 

"Investors are eagerly awaiting the speech from Federal Reserve Chairwoman, Janet Yellen. Volume is extremely low in the market and hence why we are not seeing much activity. It is not that traders do not want to trade, it is this that they do not want to place any large bets ahead of the news. If her speech is boring, then perhaps consolidation could be the reaction in the coming days.

If she fails to deliver a clear message or remains a little dovish, the equity may respond well and there is a higher probability that we could see a few more record highs."

David Jeal, Interactive Investor: 

"With investors hoping for a clearer sense of timing on the next US rate move, the market is likely to be in standby mode today. The interest rate move is pretty certain to be up and should already be priced into markets. And to a degree it is - but the market is only pricing in a 28pc chance of a rise in September.

However some Fed members are signalling that a rise is far more likely than the market thinks. A real disconnect has developed. Will Yellen's remarks remove the uncertainty, or will she hedge her bets? With the US election in November, if rates don't move now, the Fed is unlikely to be able to move much before the year end."

Ana Thaker, PhillipCapital UK: 

"Fed Chair, Janet Yellen, is set to speak over two days of the conference, the first time markets will hear from Yellen’s thoughts on recent economic data and the FOMC’s potential response. Her speech is on the topic of the“monetary policy toolkit” and there is a chance she will touch on the limits of monetary policy and the responsibility of the government to provide fiscal stimulus to the economy. However, this is complicated by the impending November election and this could be used as an excuse for the Fed to hold off changing monetary policy for even longer."

Business morale in Germany tumbled this month, data from the Ifo economic research institute showed this morning. 

The German Ifo business climate index fell to 106.2 in August - compared with forecasts of a reading of 108.5. Meanwhile, the current conditions stood at 112.8 this month - lower than expectations of 114.9.

It also revised current conditions index to 114.8 for July and the expectations index to 102.1.

The Federal Reserve Bank of Kansas City will host dozens of central banks, academics and economists from across the globe at its annual economic symposium in Jackson Hole over the next few days. 

It kicks off today until August 27 - the program will be available at 6pm MT today (You can find more information here). 

The main event is undoubtedly the speech by Fed chair Janet Yellen which will be delivered tomorrow. 

French industrial morale fell in August, falling short of expectations, data from state statistics body INSEE showed on Thursday.

Morale in the industrial sector fell to 101, still slightly above its long-term average of 100. A Reuters poll of economists had an average forecast of 103. The wider gauge of business morale also fell to 101 this month from 102 in July.

Although the composite business sentiment index is broader-based, industry morale is more closely followed by economists.

Morale in the services sector was stable, INSEE said, at 101.

In a separate survey published by INSEE, executives in France's manufacturing industry said they expected to increase investment by 6 percent this year, slightly down from the 7 percent increase they planned for in May.

Report from Reuters

The FTSE 100 has tumbled to its lowest level in 17 days as mining stocks weighed on the sector for a second straight trading session. Trading is also quiet as investors remain on the sidelines awaiting for clues about the next Fed rate hike - ahead of Yellen's speech tomorrow. 

The blue chip index tumbled to an intraday low of 6,788.39 - that's its lowest level since August 8 when it touched 6,781.47.

Car production topped a million vehicles in the first seven months of the year for the first time since 2004.

The Society of Motor Manufacturers and Traders (SMMT) said output rose 7.6pc in July compared with 2015, with cars produced in the first seven months totalling 1.023m.

This is the first time the one million milestone was reached in July since 2004, and comes despite the UK voting to leave the European Union in June.

Exports were up by 6pc last month, with a 14pc rise in output for the domestic market.

More than three-quarters of a million cars built in the UK this year were for overseas markets - almost four out of five of all cars manufactured.

Mike Hawes, SMMT chief executive, said, "UK car production in 2016 is booming, with new British-built models in demand across the world."

While Mr Hawes suggested that the performance flew in the face of the dire warnings from the Remain camp ahead of the vote, he said it was vital that policymakers ensured that Britain remained open for business.

"Manufacturers have invested billions to develop exciting new models and produce them competitively here in the UK," he said.

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European bourses tumbled at the open bell as mining stocks tumbled for a second consecutive session and investors shifting focus to tomorrow's Jackson Hole speech by Janet Yellen. 

• FTSE 100: -0.61pc
• DAX: 0.66pc
• CAC 40: -0.89pc
• IBEX: -0.51pc

Mike van Dulken, of Accendo Markets, said: "Expectations of a soft open are no surprise in light of a weak US close and Asian bourses following suit overnight. A stronger USD and lower commodity prices (notably oil hurting Energy names, but also Copper and Iron Ore) have dented sentiment although most have since found their feet.

"Traction is, nonetheless, rather lacking as investors begin their typical shift to ‘wait ‘n’ see’ mode ahead of a speech by Fed Chair Janet Yellen tomorrow. Traders are, as always, hoping to be able to decipher the path for US monetary policy. They may be left wanting. Again." 

China stocks ended at their lowest in nearly two weeks on Thursday, as banks and property companies eased after the government imposed stricter rules on lending to head off growing risks in the financial system.

The CSI300 index, which tracks the largest listed companies trading in Shanghai and Shenzhen, fell 0.6 percent to 3,308.97 points, while the Shanghai Composite Index lost 0.6 percent to 3,068.33. Both indexes hit their lowest since Aug. 12.

The property sector ,was among the top losers, slumping 3 percent at one point. The subindex finished down 2.1 percent, marking its fifth straight day of losses.

Market speculation that more local governments may impose measures to cool rising home prices also weighed on developers' shares.

Report from Reuters

Good morning and welcome to our live markets coverage. 

It's gearing up to be quiet trading session as investors turn their attention to Janet Yellen's speech at Jackson hole tomorrow. 

Michael Hewson, of CMC Markets, reckons Yellen's speech is "likely to turn out to be one great big anti-climax". 

Yesterday, the FTSE 100 slipped 0.5pc as commodity prices tumbled on the back of the stronger dollar and South African-exposed stocks fell as the rand weakened. 

On the agenda today: 

Interim results: CRH, John Laing Group, IFG Group, Cairn Homes, Spire Healthcare, Playtech, Boot (Henry), Anglo Pacific Group, Allied Minds, STV Group, Jimmy Choo

AGM: The Fulham Shore

Economics: unemployment claims (US), Ifo business climate (GER)