The EU has increased its prediction for inflation across the eurozone as it warned of "persistent challenges".

Officials lifted their projections for consumer-price growth to 5.8pc this year and 2.8pc in 2024.

The upward estimate for price rises comes amid concerns about or so-called core inflation, which strips out volatile elements such as food.

That measure of inflation will exceed the headline gauge for price growth both this year and next, according to Brussels officials.

It comes as traders bet that the European Central Bank will likely raise interest rates at least two more times this year, taking the deposit rate to a record equalling 3.75pc.

However, the European Commission also boosted its 2023 forecast for growth in the eurozone by 0.2 points to 1.1pc.

It said: "Lower energy prices, abating supply constraints and a strong labour market supported moderate growth in the first quarter of 2023, dispelling fears of a recession."

Last week the Bank of England raised its forecast for inflation in Britain, saying it would likely be around 5pc at the end of the year, higher than previous 3.9pc estimates.

Read the latest updates below.

10:06 AM

Pound rises against the dollar

The pound has gained against the dollar amid the easing of a series of factors that have boosted the greenback.

Several reasons could be behind the dollar's recent strength, including concerns about US inflation, and fears about the debt ceiling standoff and global economic growth driving safe-haven buying.

However, this morning, the pound was up 0.3pc against the dollar and heading back in the direction of $1.25.

Sterling has risen 0.2pc against the euro, which is worth 87p.

09:42 AM

Gas prices near lowest level in 22 months

European natural gas prices extended a six-week decline as sluggish demand has removed any urgency to refill storage sites.

Benchmark futures slipped below €32, near the lowest levels since July 2021, before rebounding to a 0.8pc gain.

Prices have more than halved since the start of this year amid stable supply, mild weather and stronger contributions to power generation from renewables.

Europe's gas market is recovering after Russia cut supplies in the wake of its invasion of Ukraine last year.

Storage levels across the continent are unusually high — 63pc full — after a month of net injections and an influx of liquefied natural gas.

Industrial gas demand in Europe from January to April was 20pc lower than the five-year average, according to Wood Mackenzie research analyst Rosaline Hulse.

09:29 AM

Outlook for eurozone inflation is worse, says EU

The European Commission has warned inflation will get even worse this year, revising its forecast higher to 5.8pc.

The EU's forecast for headline price growth this year is now half a percentage point higher than the ECB outlook released in March. For next year, it's just 0.1 percentage point lower at 2.8pc.

However, officials also upped the growth forecast in the eurozone by 0.2 points to 1.1pc.

The Commission said:

09:26 AM

High food prices here to stay, warns farming chief

Higher food prices are here to stay for a while to come, the president of the National Farmers' Union has warned ahead of a meeting in Downing Street.

Minette Batters will hold talks with the Prime Minister alongside supermarkets, food companies and farmers as food price inflation rises at its fastest pace in 45 years.

She warned that "with the cost of living crisis, nobody wants to [talk] about people being forced into paying more," with consumers in Britain paying less for groceries than Europeans, according to ministers.

She told the Times: "I don't see the situation changing any time soon. While the war in Ukraine continues, pressure on gas prices is going to remain higher."

Farmers are impacted heavily by the rising price of gas, which is used in the production of fertiliser and the primary fuel for electricity generation in Britain.

The cost of food had surged 19.2pc in the year to March despite international food prices beginning to fall.

It comes after supermarket chiefs blamed meddling ministers for contributing to a surge in food prices after they imposed "eye-watering" costs on the industry.

Senior directors from Britain's biggest grocers told John Glen, chief secretary to the Treasury, that onerous regulation covering everything from recycling to border checks was making the weekly shop more expensive.

09:06 AM

HSBC unveils Asia plan amid activist investor's challenge

HSBC has unveiled plans to bolster revenues in its Asia business amid mounting pressure from its top shareholder to improve performance across the region.

The banking giant told investors it is aiming for revenues in Asia's wealth business to grow by up to 9pc in the next three to four years.

It also wants to grow lending by around 15pc in the medium to long-term, which could take up to six years.

"All parts of HSBC Asia are now motoring," group chief executive Noel Quinn stated.

The goals, which form part of a week-long seminar in Hong Kong and Singapore, follow an escalating dispute between the bank and its biggest shareholder, Ping An.

Ping An Asset Management, a Chinese investment group with an 8pc stake in HSBC, has called for an Asia-headquartered and Hong Kong-listed spin-off business.

But the plan to split the company in two was rejected by shareholders at HSBC's annual general meeting earlier this month, with investors voting by 80pc against the proposals.

08:51 AM

FTSE 100 rises in early trading

The FTSE 100 has moved higher, aided by gains in lenders and precious metal miners.

However, mid-cap oilfield services and engineering firm John Wood Group logged its worst day ever after Apollo Global walked away from a potential deal.

The FTSE 100 has risen 0.3pc up, extending gains from the previous session after data showed the UK economy grew slightly in the first quarter of the year.

Banks were the biggest boost to the top index, adding as much as 1pc and precious metals miners were up 1.3pc tracking gains in bullion prices.

The domestic-focussed FTSE 250 has risen 0.1pc, even as John Wood Group slumped 35.8pc after the US private equity giant Apollo said that it does not intend to make a takeover offer for the oilfield services provider.

Currys has jumped 6.8pc, logging its best day in over a month to lead the midcap index after the electricals retailer raised its profit outlook for 2022-23 after better-than-expected trading in its home market in the final two months of the year.

The retail sector housing the stock added 1pc.

08:29 AM

Osborne becomes chairman of Lingotto Investment Management

Lingotto Investment Management has appointed former chancellor George Osborne as its non-executive chairman.

The asset manager is owned by the Exor NV holding company of Italy's Agnelli industrial dynasty.

Mr Osborne, who was chancellor from 2010 to 2016 under David Cameron's premiership, has chaired Exor's Partners' Council for the past five years, a position he will stand down from upon taking up his new role.

The former editor of the Evening Standard is a partner at boutique investment bank Robey Warshaw, having formerly held a lucrative role at the world's largest asset manager BlackRock.

08:21 AM

British American Tobacco reveal new boss

Dunhill and Lucky Strike maker British American Tobacco (BAT) has appointed its finance director as chief executive to replace boss Jack Bowles, who is stepping down after four years at the helm.

Tadeu Marroco takes on the top job from Monday after four years as finance director and a lengthy career with the tobacco giant, having joined BAT in 1992.

BAT - the world's second-biggest tobacco firm - will now kick off the search for a new finance director to replace Mr Marroco.

BAT chairman Luc Jobin said:

08:12 AM

Wood Group shares plunge as suitor drops £1.7bn takeover plans

Wood Group shares have plunged by nearly 40pc after US private equity investor Apollo Management said it would not be making an offer for the Aberdeen-based company just two days before the May 17 deal deadline to make a firm bid or walk away.

Apollo had put forward five bid proposals, with the fifth for 240p a share in cash, valuing Wood Group at around £1.7bn.

Wood Group rejected the first four approaches, saying they undervalued the group, but finally announced last month it had decided to engage in talks with Apollo after the fifth proposal, having consulted with shareholders.

Wood Group has around 35,000 staff, largely specialising in engineering and consultancy for the energy, minerals, chemicals and life sciences sectors.

It offloaded its environmental consulting division last year in a move to reduce its debt by more than $1bn (£805m).

The company appointed a new chief executive - Ken Gilmartin - last summer, who has been leading a strategy overhaul at the firm.

It has been left with a hefty debt pile since taking over rival Amec Foster Wheeler for £2.2bn in 2017, which also saw it face legacy lawsuits, including a $115m (£92.6m) settlement made last year for a damages claim filed in 2016.

08:03 AM

Markets kick off the week higher

Markets in London have opened higher, shrugging off any worries over a possible recession and the risk of a default on the US national debt.

The FTSE 100 has climbed 0.7pc to 7,783.49 while the domestically-focused FTSE 250 has risen 0.3pc to 19,251.17.

07:55 AM

Banks urged Brussels to extend access to London clearing houses

The European Union is reportedly under mounting pressure from the bloc's biggest derivatives houses to reconsider plans to move euro-denominated clearing away from the City of London.

Clearing houses, which facilitate and finalise trading between firms, have been a key battleground since Brexit, having been the only area where the EU granted London temporary "equivalence".

BNP Paribas, Deutsche Bank and Societe Generale oppose the EU's plans to move clearing of strategically important European trades to the continent as soon as possible, fearing extra costs and less efficient clearing, according to the Financial Times.

The London Stock Exchange, which stands to lose business, has also reportedly pushed for a rethink.

In the aftermath of Brexit, the European Commission has issued proposals to encourage more businesses to move from the City to onshore clearing houses by June 2025, when the temporary waiver that allows its banks and money managers to clear trades in the UK expires.

However, investors have so far been reluctant to shift trades to far smaller EU clearing houses.

07:40 AM

Slicker supply chains help Currys boost profit outlook

Electronics retailer Currys has upgraded its profit expectations after revealing trading in the UK and Ireland was better than expected in recent months.

The chain said it now anticipated a pre-tax profit of between £110m and £120m for the year to the end of April, having previously cut its profit guidance to around £104m.

Cost savings have boosted profits, with the firm previously saying it was on track to save £300m by 2023 to 2024 by making its supply chains and IT systems more efficient, and automating its back office.

Nevertheless, Currys told investors its full year sales were 7pc lower this year compared to last, driven by declines in the UK and Ireland and the Nordics and partially offset by strong sales in Greece.

07:37 AM

Wandisco aims to raise £24m to avoid running out of cash

Wandisco will seek $30m (£24m) from investors by the end of June as it seeks to resume trading in its shares after revealing a suspected $15m (£12.6m) accounting fraud.

The company has revealed it had a net cash balance of $8.1m with no debt facilities at the end of April, which the board thinks can fund only operations until the middle of July.

Bosses had already revealed earlier this month that it is to lay off a third of its staff as the Financial Conduct Authority (FCA) continues an investigation into the alleged fraud at the British tech champion.

The company announced that 30pc of employees will leave as part of a fresh cost-cutting drive.

An internal investigation found that $15m of revenues and $115m of sales the firm had reported were completely invented. Wandisco blamed the "potentially fraudulent irregularities" on "one senior sales employee".

07:20 AM

Apollo ends pursuit of Wood Group

Private equity giant Apollo has revealed it does not intend to make an offer for FTSE 250 engineering consultancy Wood Group.

The investor had made five bids for Wood, before finally being granted access to the company's accounts in April for due diligence.

The end of its £1.7bn pursuit comes days after Apollo's talks to take over THG failed.

After the announcement, Wood insisted it is "well placed to deliver substantial value" for shareholders and reaffirmed its confidence in its strategic direction and long-term prospects.

It added that it will continue with its medium term targets of increasing adjusted ebitda, a measure of profits, by mid to single digits and to return to positive free cash flow in 2024.

07:09 AM

Good morning

British consumers should prepare for food prices to remain elevated for a long time to come, according to the head of the National Farmers' Union ahead of a meeting at No 10.

Minette Batters told the Times she "does not see the situation changing any time soon" on food prices, which are rising at their fastest rate in 45 years.

5 things to start your day

1) I’ll be waiting for you with my shotgun, Revolut executive texts customer | UK boss of finance app accidentally sent text message to unhappy user

2) MoD accused of wasting millions on RAF radars with no planes to go in | Decision to buy five early warning systems for three aircraft branded 'the mother of all false economies'

3) House prices face a looming hit – from the baby boomers who got rich off property | A flood of homes going up for sale risks a total rebalancing of the property market

4) TikTok was ‘propaganda tool’ for Chinese Communist Party, lawsuit claims | Fresh allegations renew pressure on social media giant as it faces US ban

5) Extra affordability checks ‘risk creating new generation of mortgage prisoners’ | Thousands face onerous red tape when remortgaging under new rules already put in place

What happened overnight

Asian stocks were cautiously higher on Monday as investors braced for the release of China's industrial and retail data, while awaiting a host of US Federal Reserve officials to speak to vindicate market pricing of rate cuts this year.

MSCI's broadest index of Asia-Pacific shares outside Japan reversed earlier losses to be up 0.5pc, driven by a late rebound in Chinese and Hong Kong shares after a steep sell-off the week before.

Hong Kong's Hang Seng index charged 1.2pc higher while China's blue chips rose 0.6pc.

The country's central bank on Monday rolled over maturing medium-term policy loans while keeping interest rates unchanged, despite disappointing data last week that fuelled concerns about a global slowdown.

China is due to report monthly industrial production, retail sales and fixed asset investment data on Tuesday.

Japan's Nikkei advanced 0.7pc, building on the optimism from last week during the earnings season.

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