And finally, European stock markets have closed higher.

Germany’s share traders had a solid day, with industrial companies surging following stronger-than-expected Chinese service sector data.

London didn’t appear worried by the slowdown in the UK service sector, though, with traders watching events in Westminster instead.

The pound remains higher tonight, up almost half a cent at $1.317, which held back shares in UK-listed exporters.

Here’s the scores on the doors:

• FTSE 100: up 27 points or 0.37% at 7,418
• German DAX: up 199 points of 1.7% at 11,954
• French CAC: up 45 points of 0.85% at 5.468

Goodnight! GW

Andy Bruce of Reuters has spotted that this morning’s UK PMI data has weakened to levels usually associated with interest rate cuts...

Back in the UK, the group representing London’s financial industry says the contraction in Britain’s service sector highlights the urgent need to resolve Brexit.

Catherine McGuinness, Policy Chair at the City of London Corporation, says:

“The slump in the services sector is an extremely worrying development, demonstrating the real strain that continued uncertainty is putting on the economy. Businesses up and down the country are cutting back on investment amid the Brexit limbo that has gripped the country since 2016.

“This is a timely reminder that a thriving services sector is crucial to a healthy UK economy. It accounts for 80% of the UK economy and it is high time that this is recognised by politicians. We therefore welcome today’s talks between the Government and Opposition and hope that they can put their differences aside to find a pragmatic solution that puts people and business first, commits to protecting the services sector and provides much needed certainty.”

Just in: America’s service sector slowed in March, but still outpaced China and the eurozone.

The ISM’s monthly PMI index of US services companies has dipped to 56.1, down from February’s rollicking 59.7.

That’s a bigger fall than expected, but still leaves the sector firmly in expansion territory.

Services firms did report a drop in new export orders - as did UK companies this morning.

The US stock market is expected to follow Europe and Asia’s lead by rallying, when New York opens in an hour’s time:

Back in the markets, shares are still up across Europe today on hopes of a breakthrough in the US-China trade talks in Washington later today.

In London, the FTSE 250 index of medium-sized companies is up 0.8%, shaking off the alarm bells ringing in the UK economy today.

Germany’s DAX is still up 1.3%, led by industrial firms, after stronger than expected data from China overnight.

That follows the overnight rally in Asia, which saw the Nikkei gain 1% and the Shanghai Composite rise by 1.2%.

The FTSE 100, which contains larger, multinational firms, is only up 0.2% - held back by the stronger pound.

Neil Mackinnon, global macro economist at VTB Capital, explains that Beijing’s stimulus measures seem to be feeding into the real economy.

“News reports that both the US and China are close to a resolution of the trade dispute buoyed Asian equity markets this morning. In addition, the latest Chinese PMI data shows that the service sector is running at its fastest pace in 14 months.

Recent monetary and fiscal policy easing is starting to filter into the economy.

Here’s my colleague Richard Partington on the growing risk that Britain’s economy starts shrinking this year:

The British economy is at risk of sliding into a deepening downturn after stalling in the first quarter, following the weakest performance in the private sector in almost seven years as Brexit approaches.

In the latest sign the gridlock over leaving the EU is extracting a high price from the economy, the survey from IHS Markit and the Chartered Institute of Procurement and Supply showed that overall business activity stalled in March.

The country’s dominant services sector, which contributes about four-fifths of GDP, slipped into contraction as consumers and clients put spending decisions on hold in response to the intense political uncertainty.

The IHS Markit/Cips service sector purchasing managers’ index (PMI) slid to 48.9 in March from 51.3 in February, below the 50 mark separating growth from contraction for the first time since July 2016 – immediately after the EU referendum.

The survey of firms in the sector, which includes finance, shops and restaurants, will raise alarm bells at the Bank of England and the Treasury, which keep a close eye on the PMI indicators for early warning signs from the economy....

More here:

Economists at Danske Bank point out that the slowdown in the eurozone hasn’t made life easier for UK firms.

Italy’s service sector outperformed the UK last month - quite an achievement, given its economy is in recession.

The AFP newswire blames “Brexit turmoil and flat economic growth” for the news that Britain’s “vital services sector” has shrunk for the first month in almost three years.

The March 2019 reading shocked economists because market expectations had been for a drop in the index - which is regarded as a crucial barometer of UK business activity - to 50.9 [not the 48.9 recorded]

“The latest UK services PMI makes it clear that the economy is being hit hard by all the uncertainty in surrounding Brexit,” noted ING economist James Smith.

He added: “Of course, it’s important to remember that PMIs don’t always precisely reflect the extent of a slowdown, merely that an increasing number of firms are reporting worsening conditions.

“That said, this latest reading implies that the first quarter as a whole could see near-stagnant growth.”

Alpesh Paleja, the CBI’s principal economist, agrees that Britain’s services companies are now struggling:

The UK’s service sector slump comes just as rival firms across the Channel are picking up.

Germany’s services economy, for example, grew at its fastest rate in six months. Its latest PMI index came in at a punchy 55.4 this morning, much stronger than the UK’s 48.9 [reminder: 50 points = stagnation].

This week’s PMI reports show that the services sector is underperforming the rest of the economy.

While the UK service sector contracted unexpectedly in March (with a PMI of just 48.9), manufacturing expanded much faster thanks to stockpiling (its PMI jumped to 55.1).

Construction suffered a small contraction, with a PMI of 49.7 last month.

Mix it all together....and you see that the UK’s private sector flatlined in March, in the worst quarter in over six years.

Worryingly, UK services companies have now reported falling new orders for three months running.

That hasn’t happened since 2009 -- when the world economy had plunged into recession.

Markit says export demand was “particularly subdued”, which suggests the recent slowdown in the global economy is also hurting the UK.

Some service sector companies will be doing well out of Brexit uncertainty -- such as lawyers, whose billable hours must have spiked as clients seek advice.

But many others are hunkering down, explains Chris Sood-Nicholls, managing director and head of global services at Lloyds Bank Commercial Banking,

“Although there are still sub-sectors that are doing well in the current circumstances – such as some parts of professional services that thrive amid uncertainty – many others are opting to conserve cash, limit investment and keep a tight eye on costs until the fog lifts.

“Only when firms do get some greater clarity and can begin to plan properly again will we see how much of the current challenges are caused by underlying trends, such as slowing global growth, and how much is down to a temporary stall in confidence.”

The PMI report also shows that some UK firms have been forced to slash prices to boost sales.

Good news for consumers, but a worrying sign for economic growth....

Duncan Brock of the Chartered Institute of Procurement & Supply is very alarmed by the contraction in the UK service sector last month:

He blames the Brexit deadlock:

New orders fell for the third consecutive month and a drop in overall business activity for the first time in two and a half years has left the services sector facing a bleak near-term outlook.

“Worried consumers fearful of rising living costs stayed away from discretionary spending and corporate clients held back on major decisions, preferring to defer big ticket projects until the Brexit deadlock is lifted.

Unless the economy rebounds, Brock adds, Britain’s service sector firms could face “a fight for survival”.

This chart explains why IHS Markit fears Britain’s economy could soon be shrinking.

Aside from the brief dip seen after the EU referendum, today’s service sector PMI is the joint- weakest seen over the past decade.

It equals the previous low point recorded in December 2012.

European stock markets have followed Asia’s lead, with strong gains in most markets.

Germany’s DAX is leading the charge, up 1.3%, with Italy’s FTSE MIB gaining 1%.

This is the fourth day of gains in a row, helping global stock markets to hit their highest levels in around six months.

Britain’s FTSE 100 is lagging, though, because the strength of the pound is weighing on exporters (Burberry, Unilever and Diageo are among the top fallers).

This rally suggests that a US-China trade deal may be ‘priced in’ already.

Paul Donovan of UBS Wealth Management explains:

US President Trump’s trade taxes hurt US listed companies. This caused the equity market to underperform the economy dramatically last year. Hopes of an end to those taxes have caused a remarkable equity rally this year. Now Chinese Vice Premier Liu arrives in Washington to try and do a deal. Markets already expect a deal.

Theresa May’s call for a Brexit compromise is “huge news”, says Jim Reid of Deutsche Bank.

He believes it could lower the change of a general election this year -- unless May’s administration is brought down by internal infighting over the plan.

Reid writes:

She is seemingly now prepared to back down on her prior red lines and also prepared to let Parliament decide on the outcome if she and Mr Corbyn can’t. Recall that the customs union option came within 3 votes of passage on Monday.

If parliament could muster the votes to pass that plan or an even softer outcome, PM May has now, for the first time, implied that she would negotiate that with the EU without calling for elections. The removal of that risk and that of hopes of a compromise supported the pound as it rallied +0.88% off its intraday lows after her words. In theory this is very positive news for the pound assuming the Conservative government survives the shrapnel from the internal party in-fighting that this will bring.

The pound has hit a one-week high, following Theresa May’s dramatic decision last night to reach out to the opposition Labour party for a Brexit compromise.

The move, with barely a week until Britain could crash out of the EU, has enraged May’s Conservative party. But it’s been received more positively in the City, as it could potentially lead to a softer Brexit.

Sterling has gained half a cent this morning to $1.318, on hopes that a no-deal Brexit can be avoided.

BlackRock’s Rupert Harrison argues that Theresa May had no choice but to turn to Jeremy Corbyn:

Some political analysts scent a trap, though. Will Labour be forced to drop their push for a second referendum (May wants the deal done by 22 May) or left sharing the blame for the Brexit mess?

Former Nissan chairman Carlos Ghosn’s battle with the Japanese authorities has taken an intriguing twist today.

Ghosn has taken to Twitter to declare he’s preparing to reveal “the truth” about recent events and announced that a news conference would be held on 11 April.

The former chairman of Nissan is currently awaiting trial in Japan following his release on bail in Tokyo last month, almost four months after his arrest on charges of financial misconduct.

Posting his first tweet from a newly created and verified @carlosghosn Twitter account, he said:

“I’m getting ready to tell the truth about what’s happening. Press conference on Thursday, April 11.”

Ghosn, 65, is living under strict bail conditions at his residence in Tokyo until his trial begins, possibly not for several months.

The Tokyo district court set bail at 1 billion yen (£7m) after Ghosn’s newly appointed legal team said their client would agree to a list of limitations on his movements and communications.

Ghosn is accused of underreporting his income by tens of millions of dollars and transferring personal investment losses to Nissan. He faces up to 10 years in prison if convicted on all the charges. He has repeatedly denied the allegations.