Despite a raft of uncertainties - Apple’s results later on, the two day US Federal Reserve meeting, US jobs data on Friday, the continuing concerns over Brexit and this weekend’s final round of the French election - European markets maintained a calm tone throughout the day. Sentiment was helped by the agreed deal between Greece and its creditors as well as positive results from the likes of BP and pharmaceuticals group Shire. In the US, Wall Street shrugged off a poor set of car sales figures for April. Chris Beauchamp, chief market analyst at IG, said:

UK and European markets have put in a decent performance this afternoon, which is perhaps ironic given the public falling out between London and Brussels over the weekend, but in the US all is calm, and not just in a ‘pre-Apple results’ sense of the word.

Across markets the talk is of how the volatility index is at multi-year lows; like many much-lauded indicators in technical analysis, this piece of fundamental data will be used in defence of both the bullish and the bearish case. The latter will argue that this state of affairs cannot go on, and that something has to give, while the former will point out that it is reflective of the resilience of this bull market, and that investor flows into equities will mean that this state of affairs will persist for a while yet.

With a Fed meeting, non-farm payrolls and the all-important second presidential round in France to come over the next few days, the Vix could well move higher, but I suspect its low level will remain a favourite theme throughout 2017.

The final scores in Europe showed:

• The FTSE 100 finished up 46.11 points or 0.64% at 7250.05
• Germany’s Dax rose 0.56% to 12,507.90
• France’s Cac closed up 0.7% at 5304.15
• Italy’s FTSE MIB added 0.6% to 20,733.25
• Spain’s Ibex ended 0.98% better at 10,820.3
• In Greece, the Athens market jumped more than 3% to 733.93 following the country’s deal with its creditors

On Wall Street, the Dow Jones Industrial Average is currently up 31 points or 0.15%.

On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back tomorrow.

As the US Federal Reserve begins its latest two day monetary policy meeting, Wall Street has opened higher, with Nasdaq hitting another new record.

The Dow Jones Industrial Average is currently up 37 points or 0.19% while the Nasdaq Composite opened 0.15% higher and the S&P 500 added 0.17%.

Apple’s shares edged higher to another peak ahead of its results later, while Mastercard jumped 1.4% after its figures. But Pfizer and Advanced Micro Devices fell back on disappointing updates.

As for the Fed meeting, the central bank is widely expected to leave interest rates unchanged, but its statement will be scrutinised for clues as to its views on the state of the US economy. Eric Lascelles, chief economist at RBC Global Asset Management, said:

This week’s announcement should be fairly sleepy, lacking in pomp with no press conference, no updated dot plots, or new growth forecast. Our bias is for a slightly softer statement given the recent run of macro data that saw lower inflation, a lower ISM, weak Q1 GDP growth and soft March payrolls. The urgency to tighten has diminished, though June is still a decent bet with a 70% market-assigned probability.

Sterling got a lift from today’s unexpectedly strong UK manufacturing figures, and some analysts think there’s more to come.

The pound has gained almost half a cent to $1.2928, not far off last week’s six-month high.

Traders are calculating that the Bank of England is more likely to raise interest rates soon if the factory sector is buoyant (although the rather larger service sector slowed last quarter, so...).

Analysts at Nomura have predicted that the pound could end this year at $1.37 or higher, and argue that the markets are simply too pessimistic.

They write:

There are three reasons why we expect GBP to outperform:

1) the inflation premium in GBP is starting to look over-stretched;

2) the Bank of England may start to become less pessimistic if a positive global growth surprise catches the UK markets off-guard; and

3) the difficulty of the early stages of the Brexit negotiations looks to be priced in already

On Brexit, they provide a handy chart of upcoming event (although the endgame is still rather uncertain)

Nomura expect plenty of flashpoints and pitfalls as the Brexit saga plays out, but argue that this is ‘priced in’ to the pound’s current levels.

It’s been nearly a year since the Brexit vote and a lot of the negative implications of Brexit have been widely discussed. So unless the EU starts clarifying its Brexit position as “cliff edge or nothing”, the political noise on its own may not be enough to drive GBP another leg lower from here.

Back in Greece, the main opposition leader has accused the leftist-led government of condemning the country to a “fourth memorandum” (bailout agreement).

Kyriakos Mitsotakis, head of the centre right New Democracy party, slammed prime minister Alexis Tsipras for his mishandling of negotiations with creditors.

Mitsotakis says the extra cuts and tax increases which the government had just agreed to are effectively a fourth bailout, declaring:

“In order to stay in power, he [Tsipras] has committed the country to a fourth memorandum that will impoverish society, particularly the middle class.”

The new measures, Mitsotakis added, had come without any written agreement regarding debt relief or inclusion in the ECB’s QE programme - long summoned by the leftist-led administration as cause for joy and a turning point in Greece’s long-running ordeal to stay afloat.

Much-vaunted “counter measures” also triumphantly announced by the government would, Mitsotakis said, only be enforced if Greece successfully attained the very high primary budget surplus of 3.5%.

Opposition parties have said they will not be endorsing the measures when they come to parliament for vote.

European commissioner Pierre Moscovici has issued a statement hailing Greece’s agreement with its creditors.

He’s confident that eurozone finance ministers will back it and unlock bailout funds. But they must also now turn their attention to Greece’s huge debt pile.

Moscovici says:

“The agreement reached overnight in Athens on the Greek Stability Support Programme is a very positive development following months of complex negotiations.

These new efforts agreed by the Greek authorities open the way for a rapid conclusion of the second review. The swift implementation of these commitments should enable the Eurogroup to endorse this agreement at its next meeting.

This second review is strategic for Greece as it not only delivers on key reforms to modernise the Greek economy but also secures a credible fiscal path for the years to come, beyond the ESM programme. It is now for all partners to reach an understanding on the question of Greece’s debt in the coming weeks. It is time to turn the page on this long and difficult austerity chapter for the Greek people. With this agreement, we need now to write a new story of stability, jobs and growth for Greece and for the euro area as a whole.”

The head of the eurogroup, which oversees Greece’s bailout, has welcomed the deal agreed with creditors overnight.

Jeroen Dijsselbloem also confirmed that talks can now begin on making Greece’s debt ‘sustainable’ (Athens hopes this means significant debt relief......)

Just in: unemployment across the eurozone is at its lowest level since April 2009, in another sign that Europe is recovering.

The euro area jobless rate came in at 9.5% in March, matching February’s level.

That’s weaker than forecast; economists had hoped it would fall to 9.4%.

The unemployment rate across the wider European Union dropped to 8.0%, a new eight-year low.

Italy’s unemployment rate unexpectedly increased in March, from 11.5% to 11.7%, as more people reentered the labour force looking for work.

And the youth unemployment rate in the euro area remains close to 20%, highlighting the danger of a ‘lost generation’ following the debt crisis.

Eurostat explains:

In March 2017, 3.883 million young persons (under 25) were unemployed in the EU28, of whom 2.727 million were in the euro area.

Compared with March 2016, youth unemployment decreased by 439 000 in the EU28 and by 268 000 in the euro area. In March 2017, the youth unemployment rate was 17.2% in the EU28 and 19.4% in the euro area, compared with 19.1% and 21.3% respectively in March 2016. In March 2017, the lowest rate was observed in Germany (6.7%), while the highest were recorded in Greece (48.0% in January 2017), Spain (40.5%) and Italy (34.1%).

Economists are cheering the news that Britain’s manufacturing growth has hit a three year high (according to Today’s punchy PMI report).

Ms Lee Hopley, Chief Economist at EEF, says the manufacturing sector is in “rude health”:

“Following the strong first quarter for manufacturing today’s PMI confirms that lift off continued at the start of the second, with the surge in the pace of expansion partly thanks to the resilience of the UK order pipeline and the fact the global economy is investing again.

“Against all expectations nine months ago, UK manufacturing appears to be in rude health, having navigated significant exchange rate swings and rising input costs, companies are capitalising on the upswing in the world economy and pressing ahead with some new investments. While all the indicators are pointing to the potential of another year of decent growth for manufacturing, the importance of a comprehensive and enduring industrial strategy for the UK must not get lost in the noise of election campaigning.”

Dave Atkinson, UK head of manufacturing at Lloyds Bank Commercial Banking, believes factories are betting a boost from the fall in sterling.

“The manufacturers we’re speaking to are confident but cautious and even the prospect of a general election in five weeks’ time does not seem to have worried them unduly given the result will mean a government in power until 2022. This mood appears to be reflected in the PMI data.

“While the pound remains weak and is undoubtedly pushing up import costs, we are seeing a spike in businesses seeking support to export and capitalise on overseas buyers’ appetite for goods priced in sterling.

Welcome as this is, though, policymakers will be mindful that long-term export strength cannot be predicated on a weak currency alone.

Jeremy Cook of currency firm World First agrees, tweeting:

Breaking! Britain’s factory sector performed unexpectedly well in April.

The UK manufacturing PMI has surged to 57.3, up from 54.2 in March, and much stronger than economists had expected.

Companies reported that output, new order and new exports all grew at a faster pace last month. That means they also took on more staff to handle this extra work.

It’s an encouraging signal, especially as UK growth in the first three months of 2017 slowed to just 0.3% from 0.7% (as we learned last Friday).

The UK PMI has now risen for nine months in a row (shown by any reading over 50), as industry rebounded quickly from the shock of the EU referendum.

Duncan Brock, Director of Customer Relationships at the Chartered Institute of Procurement & Supply, says companies are actually struggling to keep up with demand.

Here’s his take:

“The UK manufacturing PMI sprung back to a three year high in April after a brief blip in March. Spring has ushered in green shoots of growth with April marking the ninth consecutive increase in manufacturing employment. The calling of a snap election has failed to dampen the spirits of industry with output growing at the fastest rate in three months.

“While the major political parties debate how best to leave Europe, British manufacturers have continued to increase their exports to the continent. A weaker pound has kept British products competitive on the world stage and encouraged the twelfth successive rise in manufacturing exports.

“The British manufacturing industry is moving at such a pace that suppliers are struggling to keep up with demand. Delivery times for raw materials have increased for the twelfth successive month and there are signs of shortages for both metals and plastics. With input costs rocketing upwards, some manufacturers are beginning to stockpile raw materials to protect against future price rises. So long as sterling’s buying power remains weak, however, consumers should prepare themselves for higher prices.”

Breaking: The eurozone factory sector recorded its fastest growth in six years last month, as its recovery gathers pace.

Data firm IHS Markit reports that output, new orders and employment all jumped at this fastest rate since 2011.

Most countries reported a strong rise in output (shown by a PMI of over 50 points). Germany was especially strong.

Greece, though, lagged behind as years of austerity and cutbacks continued to weigh on the economy.

The survey suggests that eurozone firms are more confident about their economic prospects.

Markit believes that Europe’s factory sector is currently growing at an annual rate of 4-5%, enough to make a significant impact.

Chris Williamson, Chief Business Economist at IHS Markit, says:

“Companies are benefitting from the historically weak euro, improved growth in key export markets, rising domestic demand and ongoing central bank stimulus including record-low interest rates.

“Optimism about the year ahead meanwhile appears unaffected by political worries, with the first four months of 2017 seeing confidence remaining elevated at the highest level since the future output series started in 2012.

“Strong – and often accelerating – rates of growth were seen in all countries with the notable exception of Greece, which remained mired in decline in part due to falling exports.”

Boom! Italy’s factory sector has posted its fastest growth in six years.

Companies reported a “sharp and accelerated increase” in output and new orders last month, according to Markit, which encouraged them to keep hiring more staff.

The Italian manufacturing PMI rose to 58.5 in April, says Markit, up from 56.2 in March. That’s the best level since March 2011.

Greece’s government debt is jumping in value, on the back of the bailout deal reached overnight in Athens.

The yield on five-year Greek bonds has fallen to around 6.1%, the lowest since October 2014. That means that their price has risen in value, as investors see Greek debt as a safer bet.

Two and ten-year Greek bond prices are also strengthening.

European stock markets have opened higher, amid relief that Greece is now unlikely to default on its debts this summer.

The news that Athens has agreed to further austerity cuts and reforms, paving the way for debt relief talks, has cheered investors.

In London, BP (+2.5%) is leading the FTSE 100 risers after reporting a big jump in profits thanks to higher oil prices.

Connor Campbell of SpreadEx points out that Britain’s factory report (due in an hour’s time) could dampen the mood:

Still to come is Tuesday morning’s main focus – the UK’s latest manufacturing PMI. Analysts are once again expecting the figure to trip backwards, this time from 54.2 to 54.0 month-on-month; that would take the reading to a 5 month low, and continue the downward spiral that has been in place since 2017 began. The pound would likely bear the brunt of this drop, meaning, if those estimates are accurate, the currency’s current losses may only widen as the day goes on.

Over in the Eurozone there was even more to deal with; not only has the region got its own wave of manufacturing PMIs, investors are also processing news of a breakthrough in the Greek bailout negotiations AND the latest polls from the French presidential election race. The latter appears to be what is driving the CAC’s trading, the French index jumping 0.3% as Emmanuel Macron kept a 22 point lead over Marine Le Pen – admittedly, down from the 26 point lead seen last week.

Here’s our Athens correspondent Helena Smith on the Greek bailout deal

After a marathon 12 hours of negotiations, the Greek finance minister Euclid Tsakalotos announced in the wee hours that Athens had finally concluded a second compliance review.

The milestone will enable debt relief talks to finally begin, but it is also replete with yet more punitive cutbacks for Greeks would enable debt relief talks to finally begin.

“We now have a decision that the Greek government will be called to enforce with laws and decisions,” Tsakalotos told reporters.

The prickly issue of primary budget surpluses - and what targets the debt-stricken country should achieve post-2018 when its third €86bn bailout expires - would be discussed as “part of a package” when the issue of debt forgiveness was also addressed, the finance minister said.

Measures in today’s deal include pension cuts of up to 18%. The conclusion of talks will ensure that default is averted when debt payments of almost €7.5bn come due in July.

But while the agreement will also mark a welcome end to the uncertainty that has plagued Greece - keeping investors at bay and the real economy in a state of turmoil - unions are already girding for battle. On May 1 over 10,000 anti-austerity protestors took to the streets of Athens.

“It will be a a very hot spring,” Odysseus Trivalas the acting president of the union of public sector employees (ADEDY) told the Guardian.

“We have yet to see the details of this agreement but what we know is that it will mean further cuts.

There will be a lot of strikes and a general 24-hour lockdown when the measures are brought to parliament for vote be that on May 12 or May 17.”

The breakthrough will also be a welcome relief for Berlin, the biggest provider of the more than €300bn in emergency bailout loans Greece has received since it first skirted the rocks of bankruptcy.Germany has been keen to avoid more “Greek drama” in the run up to general elections in September.

Few believe it will seriously countenance debt relief talks before Germans go to the polls.

This chart show how Greece has taken a step closer to debt relief, by agreeing to new austerity and reforms overnight:

Greek journalist Nick Malkoutzis points out that Greek MPs will now debate and vote on the plan:

Associated Press’s Derek Gatopoulous has more details on the deal:

(that’s Interior Minister Panos Skourletis, I believe)

After months of deadlock, Greece and her creditors appear to have finally reached an agreement on its bailout programme.

Under the deal, Greece will push through fresh reforms to its labour market and energy sector, and also accept fresh pension cuts and tax rises.

In return, Greece’s lenders will hand over the next tranche of the €86bn bailout agreed in summer 2015.

In classic Greek crisis fashion, the agreement was reached at an all-night session of talks. Greek finance minister Euclid Tsakalotos emerged from the session around dawn to declare that:

“There is white smoke… the negotiation is finished with agreement on all the issues.

The Wall Street Journal has details of the deal:

Under the accord, Greece commits to further fiscal cuts—after its current bailout ends—through pension reductions equaling around 1% of gross domestic product in 2019, and a similar amount in 2020 from a reduction in the threshold for paying personal income tax.

The deal now has to be approved by the Greek parliament in time for the next meeting of the Eurogroup (eurozone finance ministers), on May 22.

Tsakalotos added that Greece can now start discussing debt relief, saying there is “no excuse” for not tackling this issue.