FTSE 100 recovers, but US political tumult puts dollar on track for worst week in over a year

Trump
  • Greek parliament approves more austerity to unlock bailout funds
  • European shares rebound after Trump-inspired sell-off
  • Dollar index on track for worst week in over a year
  • Pound edges back above $1.30 against US dollar 

Market Report: Thomas Cook slides on rating downgrade, as FTSE 100 enjoys four straight weeks of gains despite US political turmoil

Tour operator Thomas Cook  wallowed at a two-week low after an abrupt change of heart from Barclays.

After a recent re-rating, the bank downgraded the mid-cap stock to “equal weight” from “overweight”.

In late November, analysts branded Thomas Cook’s valuation as “attractive”. However, a day after the tour operator said competition in Britain had slowed growth, Barclays changed its stance on the FTSE 250 firm, describing it as “a risky investment”.  

The bank blamed the ongoing challenging market, concerns around the UK consumer, and the lack of an imminent catalyst for the move.

However, analysts said the downgrade “might be wrong” as earnings per share moment could improve if Thomas Cook successfully turned around its airline Condor, gained market share in the UK, and delivered cost savings. Nevertheless, shares fell 2.8p, or 2.9pc, to 92.5p.

Other laggards included engineering conglomerate Smiths Group. The FTSE 100 stock suffered its worst day since mid-November after its finance boss Chris O’Shea stepped down.

Elsewhere, a raft of rating downgrades dominated market moves. Land Securities dropped 23p to £10.69 as JP Morgan lowered its rating to “neutral” from “overweight” citing Thursday’s full-year results and concerns about future London office supply.

The US investment bank also knocked British Land’s rating to “neutral” on continued Brexit uncertainty. Shares closed down 9.5p at 629p.

Meanwhile, catalytic converter Johnson Matthey went into reverse, down 35p to £30.45, after a teardown of an electric car by researchers at UBS prompted the Swiss bank to downgrade its rating. The bank’s Evidence Lab research team concluded that technology disruption in the industry will have a negative impact on the FTSE 100 company after it looked under the bonnet of the Chevy Bolt, the world’s first mass-market electric vehicle.

Vodafone was relatively unchanged at 220.3p after Barclays reduced its rating to “equal weight” as it believes cash flow growth beyond 2018 will likely be tempered by “rising competitive intensity”.

Despite a slew of bearish broker notes and a week of political tumult,  the FTSE 100 enjoyed its fourth consecutive week of gains as the Trump-inspired rout eased. The blue chip index ended the day 34.29 points, or 0.46pc, higher at 7,470.71.

Meanwhile, drugmaker Hikma lowered its sale forecast after the delay of its generic version of GlaxoSmithKline’s blockbuster inhaled lung drug Advair, dragging shares 36p into the red at £17.36.

Away from the blue chips, Peppa Pig maker Entertainment One nudged up 2.1p to 2241.4p after it said it has commissioned 117 new episodes of the cartoon, while British engineer Senior jumped 14.5p to 236.7p following a rating upgrade.

A rating upgrade from Peel Hunt bolstered shares in roofing and insulation specialist SIG, up 6.7p to 139.4p. Despite a troubled operational performance and tricky market conditions, analyst Clyde Lewis believes there is scope for “better returns”, adding the sharp prices an “attractive” risk-reward balance.

Shares in cocktail specialist Revolution Bars plunged 40.1pc to 122.3p after it warned on spiralling costs.

Aim-listed iodine producer Iofina leapt 6pc on the back of a robust set of full-year results against a challenging trading environment.

Finally, multi-currency payments service FairFX bounced 5.8pc to 55p on the back of a partnership with easyJet founder Sir Stelios Haji-Ioannou’s easyCurrency.

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

Dollar heads for worst week in over a year amid political uncertainty

The U.S. dollar was poised on Friday for its worst week since April 2016 against a basket of major currencies, having given up much of the gains made since Donald Trump was elected US president.

The dollar index, which tracks the greenback against a basket of six world currencies, has shed around 2 percent this week. On Friday, it fell 0.6pc, hitting its lowest since November 9, the day of the U.S. election results.

Uproar over Trump's recent firing of FBI director, James Comey, who was overseeing an investigation into possible links between the president's team and Russia, have pressured the dollar.

Credit: Reuters

"The dollar overall, across the board, has been getting beat up this week and a lot of that has to do with the political risk here in DC," said John Doyle, director of markets at Tempus Inc in Washington. "While we saw a little bit of a reprieve yesterday, we’re right back on that dollar weakness train."

The U.S. currency has also suffered from a resurgent euro, which has gained more than 2 percent this week and was on track for its best performance since February 2016. It rose 0.8 percent on Friday to hit a six-month high of $1.1196.

Report from Reuters

European shares end the week on firm footing

European shares closed higher after a tumultuous week dominated by US political woes and uncertainty about Trump's presidency. 

By close of play today: 

  • FTSE 100: +0.46pc
  • DAX: +0.42pc
  • CAC 40: +0.62pc
  • IBEX: +1.4pc

Chris Beauchamp, of IG, said: "The week winds to its close with US markets joining in the general rally party, gaining around half a percent so far in the UK afternoon session. Further US dollar weakness is giving succour to commodity prices, and in turn UK miners are the driving force behind the FTSE bounce. There is still no stopping the euro, which continues to climb against the US dollar; flash PMIs for the eurozone are on tap early next week, which could mark a new leg higher for the single currency.

"Meanwhile, Washington is mercifully quiet, as the president prepares for his first overseas trip. The timing could not be more convenient for the administration, and at least offers the chance of a break from ill-timed  tweets." 

Investors hit back at 'brazen' takeover bid for Faberge owner Gemfields

UK investors have reacted with fury to a “brazen” and “outrageous” takeover offer for mining company Gemfields, owner of the Faberge brand, by its largest shareholder.

Johannesburg-listed Pallinghurst Resources has launched an unsolicited bid for the 53pc of Gemfields it does not already own, valuing it at £211m. The offer, which contains no premium to Gemfields’ current share price of around 39p, would result in investors receiving 1.91 shares in the enlarged company for each Gemfields share they own.

Under the plan, the miner - which produces around 30pc of the world’s emeralds and rubies from two mines in Mozambique and Zambia - would delist from Aim, although Pallinghurst may seek a secondary listing on the main London market.

Pallinghurst is an investment fund set up by Brian Gilbertson, who oversaw the merger of Billiton, which he ran, with BHP in 2001. Mr Gilbertson’s son Sean sits on the board of Gemfields, which is by far its most valuable asset.

Read the full story by Jon Yeomans here

Dow Jones extends gains as Trump rout eases

As the Trump-inspired rout continues to ease, the Dow Jones has extended its gains this afternoon.

It is currently up 0.5pc at 20,763.10, having suffered its worst daily loss on Wednesday amid uncertainty over Trump's presidency. 

Menawhile, the Nasdaq is up 0.7pc and the S&P 500 has jumped 0.67pc. 

The Dow Jones extends its gains as Trump rout eases Credit: Reuters

Connor Campbell, of SpreadExsaid: "The market’s green glow only grew more intense after the US open, the Dow Jones the latest index to recover some of its Trump-inspired losses.

"The Dow surged more than 100 points higher as the bell rang on Wall Street, pushing it back to 20750. That’s still a rather substantial drop from the 21000-plus highs hit on Tuesday but also, admittedly, 250 points higher than the nadir struck during yesterday’s Trump-dominated trading." 

Hikma warns sales will be lower after delay to asthma drug launch

Drugmaker Hikma fell 1.5pc to £16.74 after it lowered its guidance in a trading update more than a week after US regulators blocked the launch of its generic version of GlaxoSmithKline's blockbuster inhaled lung drug Advair. Lucy Burton reports: 

Drug maker Hikma has cut its full-year revenue forecasts after its plan to launch a cheap copy of a top-selling asthma drug this year hit a major roadblock. 

The FTSE 100 company was forced to lower estimates for its generics unit by $130m on Friday - bringing overall revenue forecasts down as much as 9pc - after a US regulator blocked its application to launch a copycat version of GlaxoSmithKline's asthma drug Advair. #

Hikma's shares dropped more than 5pc on Friday, while shares in Glaxo - which is likely to see sales of the drug tumble if rivals launch cheaper versions - inched up. 

Hikma's trading update comes a week after the US Food and Drug Administration (FDA) dashed its hopes of bringing  the drug to market this year, concluding that there were 'major' issues with its application. 

"We are in the process of reviewing the response and will provide an update on our application as soon as practicable," Hikma said on Friday, indicating that the launch will not happen in 2017. 

Read the full story here

Euro heads towards $1.12

Wall Street opens higher as Trump slump continues to ease

US stocks joined their European peers in positive territory this afternoon, as calm descended on Wall Street, following a torrid week dominated by US political woes. 

At the opening bell: 

  • Dow Jones: +0.17pc
  • Nasdaq: +0.33pc
  • S&P 500: +0.27pc
Credit: Reuters

Pound on track for a 1pc weekly gain

After edging back above $1.30 following an unexplained 1pc drop last night, the pound is set to enjoy a weekly gain of 1pc against the dollar. 

The pound surged to an eight-month high of $1.3048 after strong retail sales figures on Thursday, losing momentum later in the day in what some traders called a "flash crash".

It is now trading up 0.15pc at $1.3013.

Euro hits fresh six-month high against US dollar

US political woes helped lift the euro to a fresh six-month high this afternoon. 

The single currency is currently trading a $1.1186 against the US dollar. 

Credit: Reuters

US stocks set to open higher as Trump slump eases

US indices are set to edge higher this afternoon as equity markets regain ground following the political uncertainty surrounding Trump's presidency, which rocked stocks earlier in the week. 

Despite the expected up-tick in shares, US indices are still on track for their worst weekly performance since mid-April.

Fears the fallout from the firing of FBI director James Comey could derail Trump's ambitious economics agenda, dented investor sentiment. 

Credit: Bloomberg

UK factories enjoy pre-summer boost as output rises at fastest pace in three years

Here's our full report on the CBI factory data released this morning by Szu Ping Chan: 

British factories enjoyed the biggest rise in output in more than three years in the quarter to May, as the weaker pound continued to bolster exports, according to the Confederation of British Industry (CBI).

A survey by the business group showed robust growth in the mechanical engineering and chemicals sectors pushed output up at the fastest pace since December 2013.

Domestic and overseas demand helped order books to swell to their highest since February 2015, while export orders matched the three-year high seen in March.

The CBI's poll of 432 manufacturers showed bosses expected output to grow "at the same robust pace in the coming quarter", with 37pc predicting growth, compared with 10pc expecting a decline.

Rain Newton-Smith, CBI chief economist, said: “The summer sun has come out early for Britain’s manufacturers. Robust demand at both home and abroad is reflected in strong order books, and output is picking up the pace."

Read the full story here

US dollar index hits new six-month low 

The US dollar has extended its losses, slipping to a six-month low this afternoon. 

It is currently down 0.6pc on the day at 97.306 as the US political crisis deepens. 

Dollar on track for worst week since August

The dollar is on track for its worst week since August as political woes in the US weighed heavily on the greenback. 

The dollar index, which measures the greenback against a basket of six major rivals, has fallen around 1.6pc this week, hitting its lowest since November 9 - the day of the USelection results - on Wednesday and edging back 0.3pc down close to that trough on Friday.

Credit: Reuters

FXTM Research Analyst Lukman Otunuga said: "The Greenback gasped for air on Thursday with prices temporarily reversing earlier losses after stronger-than-expected U.S economic data diverted some attention away from the Trump woes. Short-term bulls were inspired further by the hawkish comments from Loretta Mester, CEO of the Federal Reserve Bank of Cleveland, which renewed expectations of a U.S interest rate increase in June.

"The fact that the dollar has found itself under renewed selling pressure on Friday continues to highlight how the focus remains on the political instability in Washington and growing uncertainty over the future of Trump’s administration. With those who were heavily optimistic over Trump's proposed fiscal policies now having second thoughts amidst this uncertainty, the Dollar could become a seller’s best friend."

Half-time update: European shares regain momentum after tumultuous week 

After a tumultuous week, European shares rebounded today but remained on track for their worst weekly performance in six months. 

Just after midday, here's the state of play in Europe: 

  • FTSE 100: +0.39pc
  • DAX: +0.12pc
  • CAC 40: +0.4pc
  • IBEX: +0.67pc

Connor Campbell, of SpreadEx, said: "The gentle return to positive trading continued this Friday, the European indices all reclaiming some of the week’s losses.

"The FTSE kept hold of its 30 point rise as the morning progressed, though the UK index still couldn’t find the energy to re-cross the 7500 mark. The pound was even perkier, surging half a percent against the dollar to once again surpass $1.30. That was about it from the UK; Brent Crude pushed towards $53 per barrel, allowing BP and Shell to rebound from yesterday’s slump, while gold’s privileged position in these troublesome times continued to boost Fresnillo and RandGold Resources."

Landlord Grainger buoyed by growing demand for rentals and Government support

Shares in Grainger climbed 2.1p to 261.7p after it reported a 13pc rise in first-half profit and said strong trading would continue over the second half. Isabelle Fraser reports: 

Soaring demand for rented homes has lifted Grainger, the UK's largest residential landlord, along with increasing Government support for the sector.

Grainger said its net rental income grew by 11pc in the six months to March 31 to £20m, while rents went up 3.5pc. Profit before tax climbed 13pc to £41.2m.

It added that trading and growth had been “robust relative to the market” with growth across its portfolio, especially in outer London and regional cities, offsetting flat valuation in the centre of the capital.

According to the English Housing Survey, 20pc of all homes are privately rented, and that trend is set to increase across all age groups. 

Read the full story here 

Analysts react to CBI factory orders data: Strong growth now, but capacity constraints may soon kick in

After data from the CBI showed that factory output in the last three months rose by the most since 2013, here's what the experts had to say: 

Samuel Tombs, of Pantheon Macroeconomics, said the survey showed that manufacturers are benefiting from the revival in world trade and sterling’s depreciation.  

He added: "The 3pc year-over-year growth rate of manufacturing output signalled by the CBI’s survey, however, is not sufficient to offset fully the slowdown in the consumer sectors of the economy brought on by sterling’s depreciation.  What’s more, the risk that the UK leaves the EU without a deep trade deal in place is casting a cloud over the outlook for manufacturing. Indeed, the quarterly balances contained in last month’s CBI survey showed that manufacturers’ plans for investment in plant and machinery were at their lowest levels for six years. Accordingly, capacity constraints might bite soon, preventing manufacturers from making the most of sterling’s depreciation." 

 Meanwhile, Howard Archer, of IHS Markit, said: "This is an encouraging survey that fuels hopes that the UK economy is on course for some pick-up in growth in the second quarter after GDP expansion more than halved to 0.3pc quarter-on-quarter in the first quarter. Hopes of improved second quarter growth got a significant boost from retail sales picking up markedly in April, although they were helped by warmer weather and serious concerns remain over the squeeze on consumer purchasing power.

"It needs to be borne in mind that manufacturing output only accounts for 10.3pc of UK GDP and that surveys on the sector have recently tended to be stronger than the hard data.

"The May CBI survey points to the manufacturing sector being helped by a competitive pound and decent global growth. Importantly though domestic demand was reported healthy in May." 

UK CBI factory orders see fastest growth since Feb 2015 in May 

British factory orders are growing at the fastest since February 2015, data from the Confederation of British Industry showed this morning. 

Meanwhile, it found output in the last three months also rose by the most since 2013. 

The CBI's May factory order book balance rose to +9 this month from +4 in April, and export order growth returned to the four-year high recorded in March.

"The summer sun has come out early for Britain’s manufacturers. Robust demand at both home and abroad is reflected in strong order books, and output is picking up," the CBI's director of economics, Rain Newton-Smith, said.

"On the other side of the coin though, we have mounting cost pressures and expectations for factory-gate price rises are running high," she added.

The CBI said its measure of factory output growth over the past three months rose to +28 from +22, its highest since December 2013, while its inflation expectations gauge slowed slightly but remained above long-run averages.

Pound inches back above $1.30 after 'unexplained' 1pc drop last night

The pound has broken $1.30 for the second consecutive day in a row, up 0.12pc on the day, despite a relatively light economic calendar. 

However, for last night, the pound suffered a large and unexplained drop of almost 1pc in less than a minute, which resembled last October's flash crash. 

David Cheetham, of XTB, explains the sudden move lower last night:

"Whilst the scale of the decline was considerably smaller, the move will likely still cause concern for pound traders and this time the excuse of it being out-of-hours and due to low volume can’t be rolled out. On the face of it the drop appears to be most likely the result of a large stop loss order which saw a long position liquidated once price fell below the swing support level of 1.2980 and the entirety of the fall has subsequently been recovered.

"One thing this move does show is that there are large speculative positions currently in sterling and the currency could be susceptible to even greater swings going forward. Had this drop occurred at a less liquid time, as it did last October, then we could have had another similar size decline as algos jumped on the decline and exacerbated the move in thin trading conditions." 

Credit: Bloomberg

Opec panel looks at deepening and extending supply cut deal

An Opec panel are reviewing scenarios for next week's meeting in Vienna, which include deepening and extending the current supply cut deal, Reuters reported this morning, citing Opec sources. 

Opec representatives met on Wednesday and Thursday to discuss the oil market.  The meeting will conclude later today. 

Speaking to Reuters, a source said: "We have not agreed on final scenarios."

It also said a second source said the representatives were looking at a deeper cut in output. 

The meeting between Opec and non-Opec members will take place on May 25. 

The report pushed Brent crude 1.22pc higher to $53.15 a-barrel in mid-morning trade. 

Chris Beauchamp, of IG, said: "The concerted push to keep oil moving higher goes on, with the price of WTI touching its highest level in almost a month. The risk here of course is that any fresh deal from OPEC will not live up to either the hype or the bullish positioning seen among investors. Any drop back below $50 would be a very bearish development, but we’ll probably have to wait until after the event to see this occur." 

Cocktail bar Revolution's shares tumble 30pc on costs warning

Ouch! Revolution Bars Group has plunged 31.9pc this morning after it warned costs will be greater than previously expected. Bradley Gerrard reports: 

Cocktail bar Revolution has warned that the flood of costs hitting its business will be greater than it had expected, knocking nearly 30pc off its shares.

The Ashton-Under-Lyne based company bemoaned the “well-publicised costs” that are hitting the business and its rivals, such as the national living wage, the apprenticeship levy and the above inflation increase in business rates.

“These increased costs will be more than anticipated in the current year,” chief executive Mark McQuater said.

Not only this but its newly opened bars, which include its Revolucion De Cuba format, are taking longer to reach full profitability than management had previously expected.

All these factors combined mean investors' hopes for more profit growth from the company have been snuffed out, with Mr McQuater expecting operating profits to be broadly flat year-on-year.

Read the full story here

FTSE 100 recovers ground; heads for fourth week of gains

The FTSE 100 edged higher this morning, up 34.16, or 0.46pc, to 7,470.45 after a tumultuous week. 

Despite suffering a steep fall yesterday as US political woes hurt blue chip stocks, the index still remains on track for its fourth consecutive week of gains. 

Connor Campbell, of SpreadExsaid: "With no fresh news regarding the Trump-Russia scandal the European indices could catch their breath this Friday, clawing back some of their recent losses in the process.

"Unlike Tuesday to Thursday, which saw a parade of heavy-hitting UK data, this morning’s economic calendar is rather barren. That leaves investors free to mull over Trump’s various misdeeds, and whether or not they want to get back on board a set of Western indices that, in the grand scheme of things, haven’t travelled too far from their highs."

Pound edges back towards $1.30 after brief dip

After spending much of the morning below $1.30, the pound has edged back towards the $1.30 handle in quiet trade. 

It is currently trading up 0.03pc on the day, at $1.2998.

Yesterday, better than expected UK retail sales catapulted the pound above the $1.30 handle for the first time in eight months.

Data from the ONS showed retail sales volumes rose 2.3pc on the month in April, beating forecasts of a 1.0pc rise, and turning back a 1.4pc fall in March.

Credit: Bloomberg

Greek parliament approves more austerity to unlock bailout funds

The Greek parliament has approved more austerity to unlock bailout funds. Reuters has the latest: 

Greek lawmakers approved pension cuts and tax hikes on Thursday sought by the country's lenders to unlock vital financial aid, as angry demonstrators protested outside parliament over new austerity, the latest since the country plunged into crisis seven years ago.

The leftist-led government hopes that legislating the measures, four days before euro zone finance ministers meet in Brussels, will convince its lenders to release a €7.5bn bailout tranche and grant it further debt relief.

It is now up to the lenders to make good their promises, Prime Minister Alexis Tsipras told journalists.

"We deserve and we expect from Monday's Eurogroup a decision regulating debt relief which will correspond to the sacrifices of the Greek people," he said, referring to a meeting of eurozone finance ministers on Monday.

Lenders have agreed in principle to debt restructuring but not on details.

Shortly before the measures were approved just before midnight, some protesters hurled petrol bombs and firecrackers at police guarding the legislature. They responded with tear gas.

Greece has seen its national output shrink by a quarter since it was first forced to seek external financial aid in return for spending cutbacks in 2010.

The government, sagging in opinion polls, hopes a conclusion by lenders of its reforms progress, coupled with a restructure to bring down a mountain of overhanging debt, will allow Greece to be included in the European Central Bank's asset-buying programme and return to bond markets in the coming months.

Athens needs aid to repay debt maturing in July.

Credit: John Kolesidis/Reuters

It agreed to adopt more austerity, which will be implemented in 2019 and 2020, to convince the International Monetary Fund to participate financially in its latest €86bn bailout.

To sweeten the pill, Tsipras has promised to offset the new measures with tax relief also legislated on Thursday. It will be implemented only if Greece meets its fiscal targets.

New austerity has drawn brickbats from the opposition, which has accused Tsipras of costly foot-dragging.

"You've become the best advertisement for austerity in Europe," opposition Conservative leader Kyriakos Mitsotakis said, addressing Tsipras.

Greece has received about 260 billion euros in bailout aid since 2010 in exchange for reforms and deep spending cuts that plunged the economy in recession. The loans have helped balloon its debt, now at 179 percent of GDP despite a 2012 haircut.

117 new episodes of Peppa Pig are on the way

Shares in Peppa Pig owner Entertainment One have nudged up 0.9p to 240.2p after it said it has commissioned some 117 new episodes of the cartoon. Sam Dean reports: 

Peppa Pig owner Entertainment One has commissioned 117 new episodes of the hit children’s animation.

The firm said it has begun production of a series of new cartoons, which will bring the total number of Peppa Pig animations to 381.

The new episodes of the show, which centres around the cartoon pig best known for jumping in muddy puddles, will launch in the spring of 2019 and “secure a pipeline of Peppa Pig content over the following four years”, the company said.

It comes after Peppa Pig cracked the US market, where it is broadcast seven days a week. EOne now has 65 licensing partners in the country, and said earlier this year that Peppa Pig-related merchandise in US retail stores topped £160m last year.

Two years ago EOne set a goal of doubling global revenues from Peppa Pig to $2bn, after boosting its stake in the company that makes the programme.

Read the full story here

Watchdog steps up probe of Just Eat and Hungryhouse merger

Shares in Just Eat have edged up 7.5p to 599.5p this morning after the CMA confirmed it will begin an investigation into its proposed merger with Hungryhouse. Sam Dean has the details: 

The competition watchdog has confirmed it will begin an in-depth investigation into Just Eat’s proposed £200m merger with Hungryhouse.

Just Eat was given the chance to address the concerns of the Competition and Markets Authority (CMA) earlier this month, but has failed to do so, it said.

The CMA will now progress to a phase 2 investigation, and has until November 2 to make a decision.

The investigation centres around concerns that restaurants could end up with a worse deal after the merger between the two online takeaway services.

“Following its initial investigation into the merger, the CMA has found that the companies are close competitors because of the similarity of their service and their broad geographical coverage,” the CMA said.

Read the full story here

Brazil markets plunge as country's president faces bribery allegations

While attention was firmly on US political chaos, Brazilian markets plunged as allegations that President Michel Temer condoned bribes to silence a key witness deflated investor optimism about the prospects for his ambitious pension and labor reform agenda.

Brazil's benchmark Bovespa stock index slumped 8.8pc, marking its biggest daily decline since the 2008 financial crisis.

Trading had been halted for an hour after a 10pc drop triggered a circuit-breaker mechanism.

Meanwhile, the Brazilian real  dropped 8pc to 3.38 reais per USdollar, the biggest percentage drop since the currency was devalued in 1999, wiping out its gains in 2017, while bond prices tumbled.

Naeem Aslam, of Think Markets, said: "Only a few days ago, Brazilian equities were shining the most among Latin America, but after yesterday’s rout, this market is looking at a year to date loss and the Ibovespa is sitting at the bottom of the pile." 

Dollar sags against Japanese yen in early trade

The dollar sagged against the yen hurt by worries that political turmoil in Washington could delay efforts by US President Donald Trump to implement his economic stimulus plans.

The dollar eased 0.1 percent to 111.39 yen, having set a three-week low of 110.24 yen on Thursday. The dollar is down about 1.7pc against the yen for the week, putting it on track for its biggest weekly fall in a month.

The greenback had gained some reprieve on Thursday, helped by solid U.S. economic data, including a jump in the Philadelphia Fed's gauge of mid-Atlantic manufacturing activity in May. 

Focus will remain on the Trump administration's troubles following the controversial dismissal of the Federal Bureau of Investigation's director, James Comey, and that could continue to weigh on the dollar, analysts said.

"It hasn't gone away...and so the market will be swayed by any related headlines," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

Trump, striking a defiant tone on Thursday after days of political tumult, denied colluding with Russia during his 2016 campaign or asking Comey to drop a probe into disgraced former national security advisor Mike Flynn.

Report from Reuters

Donald Trump says special counsel 'hurts our country' and he is the victim of 'greatest witch hunt' in US political history

Here's our report on the latest Trump developments by Barney Henderson and Nick Allen: 

President Donald Trump declared himself the victim of the “greatest witch hunt” in US political history as it emerged his campaign advisers had 18 contacts in seven months with Russian officials before the election.

Michael Flynn, his former national security adviser, is said to have discussed setting up a back channel for Mr Trump to communicate with Vladimir Putin once he was president.

Trump: 'the entire thing has been a witch-hunt' Trump: 'the entire thing has been a witch-hunt'
00:44

The disclosures were made as the White House was left reeling by the appointment of an independent special counsel to investigate Russia’s role in the US election. 

Mr Trump was given no advance notice of the decision by his own deputy attorney general, Rod Rosenstein, who appointed former FBI director Robert Mueller to the role. 

The president’s initial reaction was described as “extremely measured” and he told senior staff in the White House, some of whom are now expected to hire lawyers, that they had nothing to hide.

Read the full story here

Dollar index on track for biggest weekly loss since July 2016

Political tumult in Washington weighed heavily on the greenback this week. The dollar index, bruised by fears the political chaos could derail Trump's ambitious economic stimulus plans, tumbled to a six-month low earlier in the week of 97.333.

It is currently holding steady at 97.797, but is down almost 1.5pc on the week. That marks its worst week since July 2016. 

The dollar index is on track for its worst week in 10 months Credit: Reuters

European shares recover but head for worst weekly loss in six months

European shares regained momentum in early trade after a torrid week of heavy losses on the back of US political turmoil, that fuelled  worries about Trump's ambitious economic agenda. 

Shares in the region are now on track for their worst week in six months. 

Here's a snap shot of the current state of play in Europe: 

Credit: Reuters

 Mike van Dulken, of Accendo Markets, said: "​A positive opening call comes after US bourses found their mojo last night, recovering some of their recent losses. Asian investors have also largely progressed overnight, but sentiment still retains a cautious bias in response to recent political turbulence, not just in the US but in Brazil now too. How equities close today will be telling as to investor confidence about holding risk over the weekend." 

Agenda: European shares rebound after Trump-inspired sell-off

Good morning and welcome to our live markets coverage. 

Overnight, China's main stock indexes nudged higher, with Shanghai shares snapping a five-week losing streak, as soothing regulatory comments and the central bank's injection offset worries over tighter regulations and economic growth.

The blue-chip CSI300 index rose 0.2pc, to 3,403.85 points, while the Shanghai Composite Index ended flat at 3,090.63 points.

On Wall Street, the main US indices made gains as investors snapped up bargains following a tumultuous week. Trump's dismissal of Comey led to the biggest sell-off in over eights months after reports the FBI director had written a memo stating the US President had asked him to drop an investigation into his former national security advisor's Russian connections.

Markets calmed yesterday as the Justice Department appointed a special counsel to probe possible ties between Russia and Trump's presidential campaign.

However, on currency markets, although the dollar index steadied yesterday, it fell to a six-month low on Wednesday, and is now set for its biggest weekly loss since July 2016.

Also on the agenda: 

Interim results: Grainger, Future

Trading update: Hikma Pharmaceuticals, Close Brothers

AGM: Hunters Property, John Laing Infrastructure Fund

Economics: CBI industrial order expectations (UK), current account (EU), consumer confidence (EU), PPI m/m (GER)

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