FTSE 100 rises but pound skids back below $1.22 after data shows economy grew by 0.5pc after Brexit vote

Trading software group Fidessa enjoyed its best day in eight months after it said the post-referendum pound plunge will boost its full-year results.

With more than 60pc of its revenue coming from outside of Europe, analysts at Jefferies flagged that the currency benefit to full-year revenue growth has now increased to 7.2pc due to the pound weakness.

Although the mid-cap group cautioned that the Brexit vote will continue to create some “uncertainty” for a period of time, it believes that the company is entering “a period where opportunity is returning to the market”. Fidessa also said it is well positioned to benefit from opportunities from new regulations.

Broker Numis upgraded the stock’s rating to “buy” in response to its latest interim management statement as it believes the FTSE 250 stock is “still undervalued”. Shares rallied 169p, or 7.4pc, to £24.65.

Elsewhere, Kaz Minerals reported a 66pc rise in production in the first nine months of the year, sending shares 19.3p higher to 302.1p.

It wasn’t an upbeat trading session for the mid-cap index, as oil services firm Amec Foster Wheeler dragged it into the red after it cancelled its Capital Markets Day (CMD). The company said it needed more time to complete a strategic review of the business, postponing its CMD until March next year. Mark Wilson, of Jefferies, said the pushback of the CMD “creates uncertainty at best”. “At worst it suggests broader company issues are more acute than first thought,” he added. Shares plunged 119p to 465.9p.

Meanwhile, commercial laundry group Berendsen became the latest mid-cap to warn on profits, following in the footsteps of Cobham, Keller and Senior. Shares tumbled 201p to £10.30 after it said it sees full-year adjusted operating profit coming in at £160m, compared to a previous guidance of £162m, due to higher-than-expected costs in its hospitality business.

The FTSE 100 benefited from a boost in banking stocks, rising 28.48 points, or 0.41pc, to 6,986.57.

Barclaysthird-quarter results came in ahead of expectations, with pre-tax profit for the three months to September end up from £1.4bn to £1.7bn, as its overseas operations enjoyed a boost from the weak pound. Shares climbed 8.7p to 190.5p.

Its peer Lloyds also rose 1.6 to 57.5p after the government reduced its stake to less than 9pc. Separately, UBS raised its target price by 2p to 67p.

On the other side, a number of stocks were trading ex-dividend. Barratt Developments fell 24.6p to 438.9p, Unilever dropped 14.5p to £34.39, Provident Financial slipped 77p to £29.64, and Wolseley tumbled 143p to £42.10.

Airline stocks also came under pressure after JP Morgan revised their target prices downwards. British Airways owner IAG dipped 9.2p to 413.5p and easyJet closed 23p lower at 921p.

Elsewhere, shares in healthcare group Spire were relatively flat at 372.3p after Liberum began covering the stock with a “buy” rating. Following the re-emergence of a speculation about a tie-up between Spire and private hospital group Mediclinic, Graham Doyle, of Liberum said a bid from Mediclinic for the remaining 70.1pc of Sprie that it does not already own in 2017 would “make sense”. “Mediclinic has often bought stakes in companies before completing a full-takeover,” he added.

Finally, Hong Kong-based activist investor Oasis Management upped its stake in Premier Foods to above 5pc, sending shares 1.7p higher to 45.3p.

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

Strong growth data out of Britain prompted the worst daily selloff in gilts for months and pushed yields on the world's benchmark bonds higher on Thursday, as expectations eased for a Bank of England interest rate cut.

In the U.S., stock market losses led by Comcast and consumer discretionary stocks were offset by gains in the healthcare sector, while European stocks slid and the U.S. dollar hit highs against the Swedish crown and Japanese yen.

Official data showed that Britain's economy slowed only slightly in the three months after it voted to exit the European Union. It grew by 0.5 percent between July and September, a touch less than the second quarter's 0.7 percent, but tempering fears about an immediate economic impact following the Brexit decision. 

Britain's 10-year government bond was up 12 basis points to yield 1.27 percent, on track for its biggest daily rise since June 2015. 

German DE10YT=TWEB and U.S. equivalents US10YT=RR rose to their highest since early June at 0.19 percent and 1.86 percent, respectively.

"The stronger (gross domestic data) print in the UK has given further weight to speculation that the BoE will not provide further stimulus any time soon," said Rabobank strategist Richard McGuire.

Report from Reuters

European bourses managed to close in positive territory after a rollercoaster trading session. 

By close of play: 

• FTSE 100: +0.41pc
• DAX: +0.05pc
• CAC 40: -0.08pc
• IBEX: +0.15pc

Joshua Mahony, of IG, said: "A topsy-turvy day in the markets has seen the pound and FTSE trading positions between being in the red and black, highlighting the strong recent correlation. With the FTSE selling off ever since its attempt to break the 7130 all-time high, today’s marginal gains are a welcome break from the sea of red.

"The resolution of the EU-Canadian trade deal came as something of a shock for many, with the seven-year negotiations seemingly headed for a Belgian roadblock. What is important about this deal is not what it means for the EU economy but the fact that it provides a blueprint for future trade deals. There is a perception that the EU is incapable of signing off free-trade agreements, but apparently that isn’t the case. Today’s deal will reduce the likeliness of any future Brexits, as the EU proves that it can get all members to agree on something for the good of the group."

Here's Reuters lastest update on the pound, which is in retreat after hitting a one-week high, and UK gilt yields, which surged to their highest level since the EU referendum:

British gilt yields surged to a post-Brexit peak on Thursday, after data showed the economy had grown faster than expected in the third quarter, reducing the chances of an interest rate cut in the near term.

The benchmark 10-year gilt yield rose 10 basis points to 1.27 percent, the highest since the Brexit vote in June, dragging other European government bond yields higher. It did little, however, to lift sterling, which fell against both the dollar and the euro.

British gross domestic product expanded by 0.5 percent in the July-September period, less rapid than the unusually strong growth of 0.7 percent seen in the second quarter but comfortably above a median forecast of 0.3 percent in a Reuters poll of economists.

Compared with the third quarter of last year, growth picked up to 2.3 percent, the strongest pace in more than a year, according to the preliminary figures from the Office for National Statistics.

The data, which did not include details of consumer spending or capital investments, gave investors the first broad insight into whether Brexit-inspired uncertainty was affecting the economy or not.

Britons voted to leave the European Union in June.

"This (data) further reduces the possibility of BoE easing next week," said Jordan Rochester, currency strategist at Nomura. "From the details we have, the upside was from service industries."

Sterling rose to a high of $1.2273 immediately after the data, its highest since Oct. 20, before easing back to $1.2192, 0.4 percent lower on the day. The euro was last trading at 89.55 pence, up 0.5 percent on the day.

The data came on a day when Japanese carmaker Nissan  said it would build its new Qashqai and X-Trail models in Britain despite the vote to quit the EU, a significant boost for Britain's post-Brexit investment outlook. 

The pound remains stuck below $1.22 against the dollar this afternoon.  

Weighing in on the GDP data, Martin Hurworth, MD, Harvey Water Softeners, said :"Businesses like ours are well positioned to capitalise in these new market conditions and become a blueprint for successful post-Brexit manufacturing; firms which make things here, sell to domestic markets and export to the EU and beyond. That’s why Sterling’s recent falls haven’t hurt us as much as our competitors, who import a lot more."

Looking at the UK as hole, he urges the government to take "big, bold action" during their Brexit negotiations with the EU, "if we're going to give more companies like Nissan a reason to stay and invest here". 

The pound has tanked in afternoon trade, back below the $1.22 mark having rallied to £1.2266 in the immediate aftermath of the UK third-quarter GDP figures. 

Traders pointed to the dollar strength, which extended its gains after US pending home sales rebounded in September. 

Meanwhile, other analysts cited fears about future economic growth. 

Connor Campbell, of SpreadEx, said the pound weakness suggests that "despite the positive surprise across the third quarter investors are still worried about Britain’s growth prospects, especially in 2017".

It is currently trading down 0.28pc on the day at $1.2192.

Stateside, contracts to buy previously owned US homes rose by more than expected in September, boosting the dollar to a three-month high. 

The National Association of Realtors said on Thursday its pending home sales index, based on contracts signed last month, increased 1.5pc to 110.0 following a drop in August.

The index was 2.4pc higher than in September 2015, the NAR said.

In its wake, the dollar hit a three-month high. 

Tata Sons, the Indian conglomerate that owns the Port Talbot steelworks in Wales, has hit out at its ousted chairman after his excoriating parting shot was made public.

Cyrus Mistry was removed from post on Tuesday, to be replaced on an interim basis by 78-year-old Ratan Tata, who held the chairmanship from 1991 to 2012.

Hours later, it emerged that Mr Mistry had written an email to executives accusing them of failing to perform their fiduciary duties and describing his removal as invalid and illegal.

In the email, Mr Mistry – the first outsider to lead Tata for generations – said that he had been a "lame duck" chairman who was powerless to prevent the tanking of businesses he said could cost the firm $18bn in writedowns.

Firing back, a lengthy statement from Tata today appeared to accuse Mr Mistry of perpetrating the leak of the email, saying: "It is unforgivable that Mr Mistry has attempted to besmirch the image of the group in the eyes of the employees."

Report from Tom Ough (Read more here)

A slew of strong quarterly earnings have lifted US stocks this afternoon. 

At the opening bell: 

• Dow Jones: +0.27pc
• S&P 500: +0.36pc
• Nasdaq: +0.44pc

 Meanwhile, European bourses remain in negative territory, with the FTSE off by 0.04pc and Frankfurt's DAX also 0.04pc lower. 

 The fact that you can't spot the Brexit vote in this chart, is the big (friendly giant) news story of the day. 

Sky's Ed Conway, however, cautions that today's GDP figures should be taken "with a pinch of salt". 

The global economy has been slightly destabilised by the US presidential, Chancellor Philip Hammond said today. 

Visiting Southampton Port this morning, the Chancellor said that business will "appreciate" regardless of the outcome of the US presidential election. 

"We are going into a period where there will be much more uncertainty," he cautioned, adding that the government will need to support the economy during that period, despite the resilience shown by this morning's GDP data. 

He added that the "only sensible" thing for him to do is prepare for a wide range of outcomes. 

The UK will enter EU re-negotiations from "a position of strength", Chancellor Philip Hammond said today, after the economy grew at 0.5pc in the third quarter. 

He remains confident that the UK's "strong links" with the rest of the world will "stand us in good stead", adding that British people have kept calm and carried on following the referendum. 

Speaking about the sterling decline, he said it means we will see inflationary pressures coming through. 

The Chancellor added that it is right that the government prepares to support the economy, despite the robust GDP data. 

"We have to behave responsibly," he said, pointing to the UK's very large debt and deficit, before adding that he will set out how the government intends to balance the budget in the Autumn Statement. 

Chris Hare, of Investec, reckons fears of a  so-called ‘Hard Brexit’, might still weigh significantly on investment spending, despite the "Big Friendly surprise" in GDP figures this morning. 

He says recent falls in the pound, while providing a fillip to exporters, will "begin to squeeze household real incomes in coming months".

However, he thinks that the chance of a post-referendum recession is looking "increasingly remote".

He continues: "Today’s GDP numbers will have implications for the MPC’s thinking on policy. Relative to the MPC’s last Inflation Report forecast, published in August, these GDP data represent clear upside news. Back in August, the committee predicted that quarterly GDP growth would fall to zero in (the initial estimate of) Q3. Since then, Q2 GDP growth has also been revised up to +0.7pc q/q, from the initial estimate of +0.6pc."

Hare reckons the stronger-than-expected economic growth, combined with recent falls in the pound have "greatly increased the probability" that the MPC will stand pat when it announces its next policy decision next Thursday.

Here's our full report on the EU-Canada CETA deal by our economics correspondent Tim Wallace: 

Canada’s long-awaited and much-delayed trade deal with the EU could be back on the cards at last as Wallonia – the region of Belgium that threw a spanner in the works earlier this month – appears to have decided to back the treaty.

The EU and Canada have been negotiating the Comprehensive Economic and Trade Agreement (CETA) for seven years, and hoped to sign to deal this month.

But Wallonia withheld its approval, preventing the EU from achieving the unanimous backing of all member nations that it requires.

As a result Canada’s trade minister declared the EU “incapable” of managing international treaties and walked out of talks to return home, while the EU’s President Donald Tusk warned the deal’s collapse could be the end of Brussels’ attempts to strike any trade deals.

Belgium’s Prime Minister Charles Michel said that Wallonia was now in agreement, and the regional parliaments may now agree to CETA by the end of Friday night, opening the door to the deal being signed.

Continue reading here

The FTSE 100 has swung between losses and gains, and back to losses, today after the pound rose following the robust UK GDP data, which showed the economy grew by 0.5pc following the Brexit vote. 

Meanwhile, European bourses also dipped into the red this afternoon despite some reassuring earnings updates from the banking sector. 

Here's the current state of play in Europe: 

• FTSE 100: -0.04pc
• DAX: -0.04pc
• CAC 40: -0.22pc
• IBEXL -0.21pc

 Joshua Mahony, of IG, said: "Early gains for the FTSE have been stifled by a surprisingly robust UK GDP reading, proving that while the Brexit referendum result heightened fears of an unravelling in UK economic activity, we remain on track for now. Dig a little deeper and it is clear that the UK remains disproportionately reliant upon the services sector (+0.8pc), the only sector to grow amid shrinking output in construction (-1.4pc), agriculture (-0.7pc) and production (-0.4pc). Unfortunately it is the services sector - accounting for almost 80pc of UK GDP - which is expected to suffer most from Brexit, putting future UK growth in a precarious position.

"In a week where the FTSE has been dragged lower by falling crude oil prices, a rising pound and negative sentiment brought about by poor earnings data, today’s strong GDP reading provides another reason to sell. Everything seems to come down to the value of the pound, and given the post GDP rise it comes as no surprise that the FTSE weakness is back in play."

John McDonnell failed to welcome the announcement by Nissan that it will produce the new Qashqai model in Sunderland during a speech in London this weekend.

Despite giving an address on the need to support British manufacturing in the wake of the Brexit deal, Mr McDonnell did not praise the company's decision and instead warned it could be seen as a "secret deal" struck with the Government. 

Asked about the announcement Labour's shadow chancellor said it showed that Theresa May's attitude to post-referendum industrial strategy is "chaotic". 

He added: "There is no coherence to it and we don't know what the terms have been agreed with Nissan." Mr McDonnell, who twice referred to Brexit as "breakfast" during his address this morning, question whether Ministers are "now going to go factory by factory offering support?", adding: "This is chaos, you cant go round the country doing secret deals."

The party is yet to put out a formal response to the announcement by Nissan, which has been welcomed by the Prime Minister, the Liberal Democrats and Ukip.

Report from our senior political correspondent Kate McCann

Away from GDP data, Twitter has confirmed those rumoured job cuts. This afternoon it announced that it will cut 9pc of its global workforce after its quarterly revenue growth slowed sharply. 

Revenue rose about 8pc to $616m, above the average analyst estimate of $605.8m but below the 20pc rise in the previous quarter. 

The social network said its restructuring plans would focus on reorganising the company's partnerships and marketing efforts. 

“Our strategy is directly driving growth in audience and engagement, with an acceleration in yearover-year growth for daily active usage, Tweet impressions, and time spent for the second consecutive quarter,” said Jack Dorsey, Twitter’s CEO.

“We see a significant opportunity to increase growth as we continue to improve the core service. We have a clear plan, and we’re making the necessary changes to ensure Twitter is positioned for long-term growth. The key drivers of future revenue growth are trending positive, and we remain confident in Twitter’s future.”

Here's a link to our full report: Twitter to cut workforce by 9pc as it reports more heavy losses  

The pound has had a rollercoasting morning dipping to a low o f $1.2202 before rising to an intraday (and one-week high) of $1.2266 after data from the Office for National Statistics showed that the UK economy grew by 0.5pc in the third quarter following the EU referendum. 

It is currently changing hands at $1.2253 - up 0.2pc on the day. 

Lukman Otunuga, of ForexTime, reckons the sterling bulls were "quite courageous" after the GDP data was released, as "bulls exploited the instance of positivity created by the GDP report to install rounds of buying". 

"The pound appreciation could be unsustainable in the medium term with potential declines expected as hard Brexit concerns cap upside gains". 

However, from a technical standpoint, he flagged that bears need to conquer 1.2200 to "encourage a steeper selloff" towards 1.2000.

Returning to the stronger-than-expected economic growth in the third quarter. We noted earlier that the growth can be attributed to the dominant services sector. The ONS noted that the economy experienced rapid growth in film and television production and distribution. 

Tom Knowles, of The Times, highlights that according to the ONS, the rise is actually box office receipts - and it puts down films like the Ronald Dahl classic, The BFG. 

Commenting on the the announcement that Nissan will build its new Qashqai in Sunderland, auto industry expert professor David Bailey at Aston University, said it was "hugely important and a vote of confidence in UK auto". 

"The Qashqai is the most produced car in the UK. It is a key part of the success of the Sunderland plant," he continued.

"Nissan were going to make this decision in early 2017 but appeared to have have pulled forward the decision to maximise leverage on the government in the wake of the Brexit vote and uncertainty over the future of the UK's trading relationship with the EU. The government knew that it couldn't afford to lose this investment.

"We don't know what deal has been done to secure the investment, whether on launch aid, or guarantees on compensation if tariffs do arise, or on energy compensation or business rate relief. Whatever the deal is, other car firms will want similar support. Let's hope that the deal includes a commitment to source more components locally."

Here's our full report on Nissan by Tim Wallace: 

Car giant Nissan will build its new Qashqai vehicles and the latest X-Trail models at its Sunderland plant, committing to the extra investment after a brief wobble in confidence following the Brexit referendum.

Nissan is something of a standard bearer for foreign companies investing in the UK and so the government was worried when the firm indicated it might reduce the scale of future operations in the country.

The firm is an important exporter with 80pc of cars made at the site sold abroad, and so is concerned that EU countries could put up barriers against British goods in the wake of Brexit.

Nissan is also a major player in the regional economy – the Sunderland plant employs 7,000 staff, whose future now appears secure following the firm’s decision.

Earlier this month Theresa May welcomed the company’s boss Carlos Ghosn to 10 Downing Street, leaving him feeling “confident” that the UK government can provide the conditions necessary for the firm to keep investing in Britain.

The new decision to do just that underlines the strength of that government support, he said..

“I am pleased to announce that Nissan will continue to invest in Sunderland. Our employees there continue to make the plant a globally competitive powerhouse, producing high-quality, high-value products every day,” said Mr Ghosn.

Read more here

Returning to this morning's GDP data, Labour's Shadow Treasury Minister Jonathan Reynolds has described the 0.5pc UK economic growth as "disappointing and sluggish". 

He says the data shows "the failures of the Tories' economic approach" after six years in power, adding the manufacturing sector is showing "little sign of benefiting" from the pound weakness. 

Reynolds continues: “It’s clear they had no plan for Brexit before the vote and are in a complete shambles about how to deliver it after the vote.

“As the leaked document from earlier this week showed, the Government can’t blame the Brexit vote for problems that were already there before it.

"Labour has consistently called for increased investment underpinned by our fiscal credibility rule, so that we can prepare our economy for any downturn from the Tories' chaotic handling of Brexit."

While we've all been focusing on UK GDP and Nissan this morning, there's been more good news this time from Belgium.  Belgian politicians have reached a deal on the landmark EU-Canada trade agreement. Reuters has the details: 

Belgian politicians reached a deal on Thursday to break a deadlock over a planned EU-Canada free trade agreement that all 27 other EU governments support but the French-speaking south of Belgium had rejected.

Belgian Prime Minister Charles Michel told reporters that the heads of Belgium's regions and linguistic communities had produced a common text to allay concerns about agricultural imports and a contentious dispute settlement system.

Any deal agreed in Belgium will still have to be put to the other 27 EU members for approval before CETA itself could be signed.

Returning to this morning's growth figures, Kathleen Brooks, of City Index, thinks the first reading of Q3 GDP suggest a few things: 

1. The UK economy hasn’t buckled from the post Brexit storm at this stage;
2. But, it isn’t all sunshine and flowers;
3. UK economy is still extremely reliant on the service sector;
4. Bad news comes from the manufacturing sector, which has seen growth contract sharply;
5. This suggests that the expected boost to exports as a result of a weaker pound may not materialise; 
6. Q3 figure is good news on the surface but dig a bit deeper and the heavily unbalanced UK economy is a cause for concern;
7. If the all-important services sector flags in the face of rising inflation and potential job cuts as a result of Brexit, then the UK economy could be in for a major shock. 

The Chancellor Philip Hammond has said he is "pleased" with official figures showing the UK economy grew by 0.5pc  in the three months since the EU referendum.

In a statement released earlier, the Chancellor said: "The fundamentals of the UK economy are strong, and today’s data show that the economy is resilient. 

"We are moving into a period of negotiations with the EU and we are determined to get the very best deal for households and businesses. The economy will need to adjust to a new relationship with the EU, but we are well-placed to deal with the challenges and take advantage of opportunities ahead.”

“Today, I’m visiting Southampton port which is a clear example of the outward-facing and globally connected nature of our economy. I am confident that our strong links with the rest of the world will stand us in good stead as we deliver an economy that works for everyone.”

Here's a look at some of the reaction to the announcement that Nissan will build its new Qashqai in Sunderland: 

Japanese carmaker Nissan  said it will build its new Qashqai model at Britain's biggest car plant, confirming a report from Reuters, marking the first major investment from the autos-industry since the UK voted to leave the EU.

Chief Executive Carlos Ghosn had warned in September that Brexit could threaten new investment in Nissan's Sunderland plant, but said on Thursday that British government support had helped it to go ahead with its new investment.

"The commitment by the UK government that Sunderland would remain competitive certainly gave us the confidence to pull this important decision forward," said a spokesman for Nissan.

Nissan said as well as the Qashqai model it would also build its next X-trail model there.

Report from Reuters

Another GBBO reference! This time from Monex Europe's Ranko Berich, who reckons the UK economy is rising like "a well-mixed Victoria sponge" despite the Brexit vote. 

“With a timely fiscal boost from the Treasury, and an eventual assist to exports due to the weak pound, it’s quite possible a good chunk of the economy’s momentum will be maintained over the coming quarters. However, political risk will remain very relevant, we still have limited visibility of investment activity, and the coming increase in inflation is likely to erode consumer confidence," he adds. 

Meanwhile, Mike Spicer, of the British Chambers of Commerce, says manufacturers have found themselves on the "wrong side of currency movements" - facing increased costs for imported components. 

“Boosting business confidence must be a key task for government in the months ahead. The Chancellor's Autumn Statement is a crucial opportunity to incentivise business investment and overseas trade. Expanding the scope of investment allowances, bringing forward changes to local taxation and increasing spend on trade promotion will go a long way to underpinning confidence," he added. 

Given the resilience in economic activity following the referendum, Andrzej Szczepaniak, of Barclays, believes the Bank of England will now "stay put" in November. 

"With headline GDP growth at 0.4pp above the BoE forecast as at the August 2016 Inflation Report, the Committee will now likely deviate from its pre-commitment of another cut this year and instead keep the powder dry for next year given we expect growth to slow further ."

Meanwhile, Kallum Pickering, of Berenberg, says the probability of the BoE tightening policy in response to the falling pound is "very low". 

"As long as the sterling selling is orderly, we see no major reason for the BoE to step in."

Stepping away from the GDP reaction for a moment, Reuters are reporting that Nissan is planning to build its new Qashqai model at Britain's biggest car plant in Sunderland. Here's the full report: 

Japanese carmaker Nissan will build its new Qashqai model at Britain's biggest car plant, a company source told Reuters on Thursday, in a major boost to Prime Minister Theresa May just months after voters backed Brexit.

Chief Executive Carlos Ghosn said in September that he could scrap new investment at Nissan's Sunderland plant, which built almost one in three of Britain's cars last year, without a guarantee of compensation for costs related to any new tariffs resulting from Brexit. 

A couple of points worth noting following the release of this morning's stronger-than-expected GDP data. 

• UK GDP: 8.2pc higher than 2008 pre-crisis peak

• Paul Sommerville, of Sommerville Advisory Markets, flags that the UK economy is currently performing better than the US

•  Q3 GDP growth of 0.5pc is in line with forecasts prior to the Brexit vote

James Hughes, of GKFX, says this morning's robust growth figures have "nothing to do with the Brexit vote, rather they are following the trend of growth in the UK that has been in place for 15 previous quarters. 

He continues: "It is more or less impossible to gauge what the effect will be on the UK economy when article 50 is invoked, and we finally do leave the European Union."

Although many will try to pin this morning's figures on signs of a 'Brexit boom' rather than a 'Brexit bust', Hughes says "very little has changed" since the referendum. 

Meanwhile, Howard Archer, of IHS, expects the economy to suffer next year, as the uncertainties facing businesses and consumers are "magnified" by the triggering of Article 50. 

"The fundamentals for consumers will highly likely increasingly weaken as their purchasing power is diluted by markedly rising inflation and muted earnings growth.

"Furthermore, the labour market looks likely to soften in 2017. However, while we expect the economy to struggle appreciably in 2017 we expect it to avoid recession."

 The Great British Bake Off may be over for another year... but there's already talk of 'The Great British Take-Off' following strong GDP figures in the wake of the Brexit vote. 

Digging deeper into the GDP data release, ONS notes that the continued growth in consumer-focused industries was "of particular interest". 

The Office for National Statistics said: 

"Retail output grew 1.8pc, while output in domestic accommodation and restaurants rose 1.7pc. Despite only accounting for 0.6pc of the whole economy, motion picture and TV programme production activity (which includes cinema ticket sales) raised GDP growth by 0.1 percentage point, growing at a very strong rate of 16.4pc."

Here's our full report by Tim Wallace on the Q3 GDP figures: 

Britain’s economy expanded by 0.5pc in the three months following the EU referendum, slowing down a touch from the 0.7pc growth recorded in the previous quarter buy defying the most pessimistic predictions made by the Remain campaign.

The country's economic performance was stronger than the 0.3pc predicted by economists, and in line with the official forecasts made before the referendum took place – in March the Office for Budget Responsibility predicted third quarter growth of 0.5pc.

It also disproves the Treasury’s referendum campaign claim that a vote to leave the EU would result in 0.1pc fall in GDP in the third quarter that would herald the start of a recession. The Treasury’s worst-case “severe shock” scenario was even more pessimistic, predicting a 1pc fall in the three-month period.

Sterling rallied on the initial estimates from the Office for National Statistics, and economists said the unexpectedly strong numbers make it less likely that the Bank of England’s monetary policy committee (MPC) will cut interest rates at next month’s monetary policy committee meeting.

The dominant services sector grew by 0.8pc in the third quarter, but the other major sectors all contracted – construction fell by 1.4pc, agriculture by 0.7pc and production by 0.4pc. Within that, manufacturing output dropped by 1pc.

Continue reading here

Although the headline figures showed the UK economy grew by 0.5pc in the three months following the Brexit vote, Lib Dem Treasury spokesman Susan Kramer warned: "The underlying trends in growth are seriously worrying". 

She highlights that the service sector is the only sector growing, while exporting industries are "holding back investment out of concerns over Brexit". 

"We urgently need the Chancellor to change course in the Autumn Statement and provide the clarity and certainty businesses need.

"That includes ignoring the bluster from the right-wing of his party and committing to keeping the UK in the Single Market," Kramer concluded. 

The economic impact of Brexit is more likely to be "a gradual drag" on growth over the next few years as negotiations with the EU proceed, rather than "a short, sharp shock", John Hawksworth, of PwC, said this morning. 

Reacting to the stronger-than-expected economic growth following the Brexit vote, Hawksworth said the GDP data confirmed that the UK economy held up "remarkably well" in the third quarter, brushing off earlier fears that the referendum outcome could cause "an immediate dive into recession". 

The growth of 0.5pc in the three months to September was "entirely reliant on the resilience of the services sector", he flagged, adding that both manufacturing and construction are seeing a post-referendum fall in activity. 

"Given that these are generally the most cyclical sectors, this could still be a harbinger of a future moderation of growth if their weakness spreads to the services sectors, although there is little hard evidence of this yet," he continued. 

"The two strongest sub-sectors in the third quarter were transport and communications and distribution, hotels and restaurants. The latter in particular reflects continued strong consumer spending through the summer and early autumn, but this could be eroded over the next year as the weaker pound pushes up import prices and squeezes real household spending power." 

That didn't last long - the pound is now back where it was before the data release. 

Analysts react after UK GDP grew by 0.5pc in the third quarter, beating forecasts of 0.3pc. 

Jordan Rochester, of Nomura, cautions that the negative to be aware of would be the "slowdown/declines" in construction and manufacturing that "still keep open a question mark as to how good of a number this really is". 

He adds that the data "further reduces the possibility of Bank of England easing next week". 

Meanwhile, former MPC member Andrew Sentance, says the impact of the referendum on investment is "still likely to dampen growth next year". 

Anna Stupnytska, Global Economist at Fidelity International, says it's still too early to read too much into the data. 

"As survey evidence suggests, investment intentions have been hit following the Brexit vote and this should ultimately manifest in lower actual business investment numbers in the coming quarters.

“As we move into 217, lower real income growth on the back on higher inflation and a potentially weaker labour market dynamic should start impacting consumption. But given the easing in financial conditions on the back of the lower pound, the economy might well manage to avoid recession next year."

Meanwhile, Geoffrey Yu, Head of UK Investment Office at UBS Wealth Management, says anecdotal evidence supports the view that £we’re yet to see any meaningful damage as a result of the Brexit vote" -at least in the short-term.

But he cautions: “Of course, we should not overlook the lingering sense of uncertainty. Though the economy has fared better than initially feared, we expect that economic growth will slow down relative to the early part of this year.”

Jeremy Cook, of World First, weighs in on the latest GDP figures: 

“We have called the UK consumer a hardy beast in the past and in Q3 the beast was back. The services sector singlehandedly drove growth to a 15^th consecutive positive quarter and while the ‘little evidence of a pronounced effect’ from the Brexit vote is being seen yet, we think that it will be as gradually obvious as the year comes to an end. The beast will tire as inflation fires arrows at its increasingly weakening hide.”

However, he flags that this is only the preliminary figure - and as such it only represents about 35 to 45pc of the UK economy in the three months to September end. 

"The number is also more likely to be heavily weighted to those earlier months and so a clear picture of growth through the quarter this will not be.

“A more typical picture of what UK growth is going to look like post-Brexit will only emerge once Article 50 is invoked and the plans for trade and investment made clear. This will be the true crucible for GDP.”

The pound spiked to a one-week high against the dollar after the UK GDP data showed the economy grew by 0.5pc in the third quarter. 

It touched an intraday high of $1.2263. However, it has since retreated a little and is changing hands at $1.2236, up 0.06pc on the day. 

Meanwhile, bond yields also surged on the back of the data release. UK 10-year gilt yields rose 7 basis points to 1.23pc, the highest since the Brexit vote in June.

This chart shows that GDP in the UK grew consistently during the 2000s until a financial market shock affected UK and global economic growth in 2008 and 2009.

The latest quarter marks the 15th consecutive quarter of positive growth since the beginning of 2013 with the level of GDP now 8.2pc above its pre-downturn peak (Quarter 1 2008). In addition, GDP grew by 2.3pc between Quarter 3 2016 and Quarter 3 2015, slightly up on the previous quarter.

Three main trends have emerged from the most recent data:

1. The continued growth of services which drove GDP growth in Quarter 3 2016;
2. The impact of recent currency fluctuations on the volume of manufacturing output;
3. A subdued performance in the construction industry. 

Here's the link to the full report

Reacting to this morning's GDP figures, the Chancellor of Exchequer, Philip Hammond, said the fundamentals of the UK economy are "strong", adding that the data shows that the economy is "resilient". 

"We are moving into a period of negotiations with the EU and we are determined to get the very best deal for households and businesses. The economy will need to adjust to a new relationship with the EU, but we are well-placed to deal with the challenges and take advantage of opportunities ahead.”

“Today, I’m visiting Southampton port which is a clear example of the outward-facing and globally connected nature of our economy. I am confident that our strong links with the rest of the world will stand us in good stead as we deliver an economy that works for everyone.”

Important quote from the release:  

Joe Grice, of ONS, says: "There is little evidence of a pronounced effect in the immediate aftermath of the vote.”

Here's Reuters take on GDP data release: 

Britain's economy barely slowed in the third quarter despite the Brexit vote shock, further diminishing the chance of a fresh interest rate cut by the Bank of England next week.

Gross domestic product expanded by 0.5 percent in the July-September period, less rapid than the unusually strong growth of 0.7 percent seen in the second quarter but comfortably above a median forecast of 0.3 percent in a Reuters poll of economists.

Compared with the third quarter of last year, growth picked up to 2.3 percent, the strongest pace in more than a year, according to the preliminary figures from the Office for National Statistics.

"There is little evidence of a pronounced effect in the immediate aftermath of the vote," ONS chief economist Joe Grice said, adding growth was in line with the pattern since 2015.

Supporters of Brexit are likely to say the figures back the claims they made during the referendum campaign that warnings of a big hit to Britain's economy from a vote to leave the EU were little more than scaremongering.

The stronger-than-expected growth in the third quarter was thanks only to the country's dominant services sector which saw rapid growth in film and television production and distribution.

The ONS linked the pickup to strong box office receipts in July when the latest releases in the Jason Bourne and Star Trek series hit the screens along with other blockbusters.

The figures provide the first broad estimate of the size of the hit to Britain's economy from the referendum decision in June to leave the European Union.

Many economists originally expected a 'Leave' vote to push the economy quickly into a shallow recession.

The BoE said as recently as September that the preliminary ONS reading would probably show growth in the third quarter of only 0.2 percent.

The Bank has come under criticism from some Brexit supporters for warning of a big economic hit from a vote to leave the EU. It has predicted a sharp slowing of growth next year as the impact of the referendum is felt more fully.

The central bank is due to decide next week whether to cut interest rates further below their all-time low of 0.25 percent, something it hinted at last month.

But its governor, Mark Carney, suggested on Tuesday that he was concerned about the sharp fall in the value of the pound and how that will push up inflation, further dampening already low expectations of a rate cut on Nov. 3.

A Reuters poll of economists has shown the BoE is not expected to ease policy until early 2017.

Finance minister Philip Hammond will also pay close attention to Thursday's GDP figures.

He is due to announce his first budget plans on Nov. 23 and has suggested he could approve higher levels of public spending if necessary to help the economy cope with the Brexit slowdown.

The ONS said on Thursday that the country’s dominant services sector provided all the growth for the economy in the third quarter, growing by 0.8 percent from the April-June period.

Industrial production, including manufacturing, and construction both contracted, down 0.4 percent and 1.4 percent respectively. The fall in construction was the biggest since the third quarter of 2012.

In August alone, the services sector grew by a monthly 0.2 percent after a strong July when it expanded 0.4 percent, the ONS said, citing its separate index for the sector.

The preliminary GDP data do not include a breakdown of spending and are based on estimates accounting more than half of the overall reading.

Anthony Cheung, of Amplify Trading, reacts to the UK GDP data beat: 

"An impressive reading in the first look at UK growth in Q3 with the ONS stating that there is little evidence of a pronounced effect in the immediate aftermath of the Brexit vote. 

"Although this has come as welcome relief for GBP in the short term the greater effects will materialise in the coming months as inflation continues to creep higher and we draw closer to triggering Article 50.  

"We still remain of the view that more GBP depreciation will be seen into year end."

Britain’s economy expanded by 0.5pc in the three months following the EU referendum, slowing down a touch from the 0.7pc growth recorded in the previous quarter.

That is stronger than the 0.3pc predicted by economists, and in line with the official forecasts which were made before the referendum took place – in March the Office for Budget Responsibility predicted third quarter growth of 0.5pc.

Sterling rallied on the initial estimates from the Office for National Statistics, and economists said the unexpectedly strong numbers make it less likely that the Bank of England will cut interest rates at next month’s monetary policy committee meeting.

The dominant services sector grew by 0.8pc in the third quarter, but the other major industries all contracted – construction fell by 1.4pc, agriculture by 0.7pc and production by 0.4pc. Within that, manufacturing output dropped by 1pc.

Report from our economics correspondent Tim Wallace

Here are the main findings from the ONS  release: 

1. Change in gross domestic product (GDP) is the main indicator of economic growth. GDP was estimated to have increased by 0.5pc in Quarter 3 (July to Sept) 2016 compared with growth of 0.7pc in Quarter 2 (Apr to June) 2016. GDP was 2.3pc higher in Quarter 3 2016 compared with the same quarter a year ago.
2. This is the first release of GDP covering a full quarter of data following the EU referendum. The pattern of growth continues to be broadly unaffected following the EU referendum with a strong performance in the services industries offsetting falls in other industrial groups.
3. In Quarter 3 2016, the services industries increased by 0.8pc. In contrast, output decreased in the other 3 main industrial groups with construction decreasing by 1.4pc, agriculture decreasing by 0.7pc and production decreasing by 0.4pc, within which manufacturing decreased by 1.0pc.
4. The preliminary estimate of GDP is produced using the output approach to measuring GDP. At this stage, data content is less than half of the total required for the final output estimate. The estimate is subject to revision as more data become available, but these revisions are typically small between the preliminary and third estimates of GDP, with no upward or downward bias to these revisions. All figures in this release are seasonally adjusted. In line with the National Accounts Revisions Policy, no earlier periods have been revised.

The UK economy grew by 0.5pc in the third quarter - that compares to forecasts of growth of 0.3pc and second quarter growth of 0.7pc.

More to follow... 

Pound spikes to $1.2239 ahead of UK GDP data. 

With five minutes to go until the highly anticipated GDP figures, here's some light reading in advance of the release.  

erling fell on Thursday, as risk appetite in global markets waned and investors grew cautious before the first reading of Britain's third-quarter growth data, capturing the impact on the economy of June's Brexit vote.

Analysts are expecting a 0.3 percent rise in gross domestic product last quarter, which would keep the annual growth rate steady at 2.1 percent. The data, due out at 0830 GMT, will not include details of consumer spending or capital investments but give the markets an insight into whether Brexit-inspired uncertainty is affecting the economy or not. 

"A better-than-expected quarter is likely to see a sharp rebound in the pound," said Kathleen Brooks, research director at City Index. "A weaker-than-expected reading could see another plunge in the pound, although we think a positive surprise would have a larger impact, since so much Brexit gloom is already baked into sterling."

Sterling was trading 0.3 percent lower at $1.2212, while it was also lower against the euro at 89.40 pence . The pound also tends to perform in sync with stock markets, which were nursing losses on Thursday.

Traders and analysts said the evidence so far suggested that the economy had held up well and Britain was likely to dodge a recession.

Nevertheless, the currency has shed nearly 18 percent against the dollar since the June vote, with losses accelerating in October after May raised the prospect of a "hard" Brexit.

This would mean the government favouring tighter immigration controls over free trade in exit negotiations, potentially curbing the foreign investment needed to fund Britain's huge current account deficit.

Report from Reuters

The FTSE 100 has turned positive ahead of the UK GDP data release. With 15 minutes to go until the data is released, the blue chip index is now trading up 33.45 points, or 0.48pc, at 6,991.27.

Jim Reid, of Deutsche Bank, highlights that the bank's economists are also pegging a 0.3pc quarter-on-quarter growth forecast, in line with wider market expectations. 

He says that while the Brexit vote should show up more clearly in the Q3 GDP data there may be "some upside risks" given the resilience of short term data post the referendum.

Elsewhere,  Hussein Sayed, of FXTM, thinks today's figures will show how the economy fared in the immediate aftermath of the Brexit vote.

"Although the data will likely show that growth slowed from the previous quarter it’s still not as gloomy as many had predicted earlier. If the figure managed to beat the 0.3pc expected growth, this will end speculations on further easing in monetary policy and provide some short term relief for the pound."

Looking ahead to the GDP data release, Simon French, of Panmure Gordon, says the fundamental drivers of expansion, namely affordable and available credit, population expansion, real wage growth and stable governance "remain intact while the devaluation in sterling since November 2015 is continuing to support a recovery in UK manufacturing".

He adds:  "While inflationary spikes are anticipated in both energy and food markets during the early part of 2017 the momentum within the UK economy, with the promise of a less austere fiscal stance at the Autumn Statement, should ensure that the immediate risk of a sharp reversal in activity has been averted."

Meanwhile, Naeem Aslam, of Think Markets, thinks the headline figure could bring "a lot of volatility". 

However, he reminds investors that it is important to "peel the layers off and read what the data is actually telling you".

"Traders need to keep in mind that the UK's economy is mainly dependent on the service sector and this represents a large portion of country's economy. Industrial production and construction output is likely to show some weakness and may subtract 0.16pcfrom the GDP growth.

"The services index should be able to pull the weight and make a net positive contribution. The services index may add some meaning number for the GDP given that we have seen 0.4pc m/m increase during June and July. The forecast for the U.K. Q3 GDP number is for 0.3pc but we think that the final number has the ability to print a better number."

Jeremy Cook, of World First, says that the recovery in the pound can be partly attributed to some buying ahead of this morning's GDP report. 

He reminds investors that today's release is only the preliminary figure of Q3 growth and therefore represents only about 35-45pcof the total picture of the UK economy in July, August and September.

"The number is also more likely to be heavily weighted to those earlier months and so a clear picture this will not be.

Surveys are suggesting a number between 0.1pc and 0.4pc with consensus estimates looking for a figure of around 0.3pc but this is the muddiest figure we will have seen in a while given the collapse in expectations in July and the rebound in August. Manufacturing may be optimistic but services are not sharing in that joy.

The pound is currently hovering above the $1.22 mark against the dollar, down 0.16pc on the day at $1.2206.

Economist Rupert Seggins reminds us that this morning's UK GDP figures for the third quarter are "less a test of Brexit and more a test of immediate resilience to economic policy uncertainty". 

Kathleen Brooks, of City Index, also looks at the possible market reaction following the release of Q3 GDP data at 9.30am this morning: 

1. Market to remain "fairly sanguine" if GDP growth is inline with expectations;
2. Expect a more volatile move if we get growth at 0.6 to 0.7pc or below 0.1pc;
3. A better than expected quarter is likely to see a sharp rebound in the pound (It could break above $1.25);
4. A weaker than expected reading, could see another plunge in the pound;
5. Expect the FTSE 100 to head towards fresh record highs above 7,129 on a better-than-expected reading
6. A weaker reading could prove to be "the canary in the coalmine" for the FTSE 100

7. If Q3 GDP disappoints then expect UK equity investors to "start to panic about the impact of Brexit", and for the FTSE 100 to begin to share the burden of negative UK economic sentiment with the pound.

Back to the may event of the day, UK GDP figures.  As I mentioned earlier, growth of 0.3pc is expected for the last quarter, which would keep the annual rate steady at 2.1pc. In the second quarter, the UK economy grew by 0.7pc. 

Kathleen Brooks, of City Index, reckons today's GDP figures could contain some hints of "a much darker picture" for the UK economy in the future. 

"We expect growth to be heavily skewed towards the consumer in Q3, as signs have already been growing that industry and construction have suffered in the aftermath of the Brexit vote. Industrial production has fallen sharply in recent months; it fell by 0.4% in August. Construction is facing a steeper decline, the latest Office for National Statistics data on construction output has fallen 2pc since June. In contrast, the service sector PMI bounced back after a sharp decline in service sector sentiment in July. We expect this pattern to be repeated in the Q3 GDP report."

Shares in BT edged up 0.3pc to 388.7p after its second quarter results were in line with market expectations. Kate Palmer reports: 

BT's sales have soared by a third on the back of its acquisition of mobile operator EE, but the telecoms giant still faces the spectre of a ballooning pensions deficit and a growing debt pile.

The FTSE 100 group reported a 35pc surge in sales to £6.01bn in the three months to September 30, while pre-tax profits increased 5pc to £671m. Without the boost from EE, revenues increased by just 1.1pc.

BT's pensions black hole shot up to £9.5bn at September 30, increasing by £3.3bn in the space of just three months. City analysts have warned the deficit could put its shareholder dividends at risk.

BT blamed "both falling corporate bond yields and higher expected inflation" for the bulging deficit, saying that the Bank of England's decision to re-start quantitiative easing had hit returns. 

Continue reading here

Staying with banks, British lender Barclays enjoyed a forecast-beating bounce in its third quarter profits to £1.7bn. Ben Martin has the latest: 

Barclays has enjoyed a jump in profits after a revival at its bond trading business helped to offset a further £600m charge for the payment protection insurance mis-selling scandal.

Pre-tax profits at the bank, which is led by boss Jes Staley, climbed 35pc in the three months to the end of September to a better-than-expected £837m. Stripping out exceptional items, profits jumped to £1.7bn from £1.4bn a year earlier.

Barclays received the biggest boost from its investment banking business, where revenues from fixed income trading surged by 40pc to £947m.

Bond trading, which had slumped in recent years, has enjoyed a recovery in recent months, spurred by the Brexit vote and investor speculation about global central bank policies. This revival has boosted many of Barclays’s Wall Street rivals, with US banks Goldman Sachs, Morgan Stanley, and Bank of America all buoyed during their third quarters by strong performances from their fixed income divisions.

Barclays has remained dogged by regulatory issues however, and booked a further £600m provision to cover its customer compensation for the PPI scandal. Lloyds Banking Group yesterday set aside a further £1bn for PPI and the market expects Royal Bank of Scotland to take a charge tomorrow when it posts its results.

Read more here

Shares in Deutsche Bank climbed 1.12pc this morning after the German lender posted a surprise net profit of 278m euro in the third quarter. It also said settlement discussions with the Department of Justice, relating to its mis-selling of mortgage backed securities are ongoing. 

Ben Martin reports: 

Troubled German lender Deutsche Bank a reported a surprise €256m (£229m) profit in the third quarter, compared with a loss of more than €6bn in the same period last year.

Deutsche outdid the expectations of analysts surveyed by Factset, who had predicted it would book a loss of €949m between July and September.

The group said revenues increased to €7.5bn, slightly up from 2015's third quarter, driven by 10-pc growth in its investment banking division.

Revenues declined in all other business areas, which Deutsche said was largely down to the "impact of the ongoing low interest rate environment".

"We continued to make good progress on restructuring the bank," chief executive John Cryan said in a statement.

Continue reading here

Another slide in oil prices dragging commodity-related stocks into the red this morning. 

• FTSE 100: +-0.31pc
• DAX: -0.43pc
• CAC 40: -0.58pc
• IBEX: -0.33pc

 Henry Croft, of Accendo Markets, said: "Yet another negative opening call comes a multitude of factors weigh on market sentiment; Oil prices are continuing to tumble as market concerns grow that an OPEC deal next month is becoming increasingly unlikely; overnight Chinese macro data showed a sharp downturn in industrial profit growth (although worth noting that the data for the first 9 months of the year outpaces last year’s 8.4% growth); and finally cautious positioning from investors ahead of the first post-referendum UK GDP figures is doing nothing to help buoy the market. However some optimism remains, Q3 earnings reporting continues with Barclays beating expectations by just over 10pc as pre tax profits rise by 35pc YoY whilst BT also marginally beats expectations and keeps its full year outlook unchanged." 

Good morning and welcome to our live markets coverage. 

After a rather lacklustre week on the macroeconomic data front, today we have the first post-referendum UK GDP data, which will show the impact of the Brexit vote. 

The economy is expected to grow by 0.3pc in the last quarter, down from 0.7pc in the previous quarter. 

Michael Hewson, of CMC Markets, reckons it is also likely to show that the services sector will have contributed "the lion’s share of the economic momentum with expectations of a quarterly figure of 0.3pc to 0.4pc expected".

"The risk is that the decline in the pound could see price rises in the months ahead which could well take the heat out of consumer spending in the lead up to Christmas.  We could get an early taste of that with the latest CBI retail sales numbers for October, particularly after a poor September number.

"What does seem likely is that a decent GDP number today could well put the final nail in the prospect of further policy action by the Bank of England at next week’s rate meeting, and thus help push the pound further away from this week’s recent lows at 1.2082, against the US dollar."

Figures will be released at 9.30am. 

Also on the agenda today: 

Full-year results: Redefine International, Debenhams

Interim results: C&C Group, Bloomsbury Publishing, Stobart Group

Trading update: Barclays, BT Group, Kaz Minerals, RELX, Inchcape, Henderson Group, DS Smith

AGM: Premaitha Health, Argos Resources, Blenheim Natural Resources

Economics: Unemployment change (GER), M3 Money Supply y/y (EU), private loans y/y (EU), unemployment claims (US), pending home sales m/m (US)