Wall Street is holding onto its earlier gains, as traders cling onto hopes of progress at the trade talks in Washington.

The main indices are up around 0.4% in late trading.

Trade war optimism had also pushed the Dow Jones industrial average up by 214 points right now.

That’s a gain of 0.8%, to 26,560 points, at noon New York time.

Britain’s FTSE 100 index of blue-chip shares has closed 19 points higher at 7,186, up 0.3%.

Optimism over the trade talks lifted shares, although the strengthening pound held back multinational with large overseas earnings.

David Madden of CMC Markets says:

Traders are a little more hopeful about the US-China trade talks after President Trump tweeted he will meet Liu He, China’s Vice Premier, tomorrow. In a continuation of the back and forth on the trade front, Mr Trump tweeted China ‘wants to make a deal, but do I?’. The fact Mr Trump will meet with Liu He sends a positive message, which is why we have seen an uptick in sentiment. The gulf between the two sides is wide, but a willingness to sit down and negotiate has injected some hope in the markets.

Donald Trump’s trade tweet came as two Republican donors with links to the president’s lawyer, Rudy Giuliani were reportedly arrested on campaign-finance charges.

Our US Politics Live blog is tracking all the action.

On trade, my colleague Joan E Greve explains:

Meanwhile, Trump announced over Twitter that he would meet tomorrow with the Chinese vice premier to engage in trade talks.

The vice premier, Liu He, is leading China’s negotiating team as the two countries attempt to wind down the tit-for-tat sanctions that have escalated in recent months.

Trump has shown little willingness to end his trade war, but US stocks still surged following his announcement that he would sit down with Liu.

More here:

Never underestimate the power of a Donald Trump tweet.

All the main US stock indices, and nearly every European market, are solidly higher since the president tweeted that he’ll meet Chinese vice-premier Liu He tomorrow.

Connor Campbell of SpreadEx says has lifted optimism in the markets:

Despite a gloomy start to the week, there have been enough titbits in the last couple of days to keep hopes of trade progress alive. First there was Wednesday’s claim from a Chinese official that Beijing is open to a ‘partial trade deal’ in order to limit the negative impact to the country’s economy.

And then, this Thursday, Donald Trump tweeted that he would be meeting with Vice Premier Liu He at the White House on Friday – a step up from Washington’s usual high level negotiating team of Robert Lighthizer and Stephen Mnuchin, and perhaps a sign that something more substantial could come out of the talks.

Donald Trump has just tweeted that he’ll meet Liu He on Friday at the White House.

That could be an encouraging sign, suggesting that the Chinese delegation won’t be leaving early (as sources had hinted earlier this week).

The New York stock exchange has opened very cautiously, as investors await developments from the US-China trade talks.

The Dow Jones industrial average has gained just 3 points, or 0.012%, to 26,349. The S&P 500 and the tech-focused Nasdaq index are equally subdued.

Edward Moya of trading firm OANDA says the talks between Liu He, Stephen Mnuchin and Robert Lighthizer are crucial for the markets:

If we don’t see a complete collapse in trade talks, the bullish case for US stocks remains in place as the US economy is still likely to see modest growth and the Fed is unlikely to raise rates over the next couple of years as inflation will probably not rise above their target over the next year.

European markets are also quiet, with the FTSE 100 up 13 points or 0.2% at 7179.

Just in: US inflation was weaker than expected last month, potentially bolstering the case for an interest rate cut next month.

American consumer prices were unchanged month-on-month in September, below the 0.1% expected. On an annual basis, prices rose by 1.7%, below the 1.8% expected.

Separately, fewer Americans filed new unemployment claims than expected last week. The Initial Jobless Claims total rose by 210,000, down from 220,000. That suggests US firms aren’t rushing to lay off staff, despite signs that the economy is slowing.

Brexit uncertainty may not prevent a bidding war for perhaps the most famous hotel in the world - The Ritz.

According to The Times, the Ritz’s owners are canvassing potential bids which could value the hotel at £800m - or more than £6m a bedroom.

That’s a remarkable price, even for such a prestigious property on Piccadilly. It had a turnover of £47m in 2018, yielding operating profits of £15m.

But Paul Olliff, legal director at law firm Ashfords, suspects the Barclay family won’t struggle to find interest.

”A hotel of this size and prominence being for sale will not only attract significant attention in the UK but also worldwide. You would expect a pool of 10 or so ultra-high net worth individuals entering a bidding process. Whether £800m is a true reflection of the asset’s value will be a potential hurdle to the sale and achieving that sale price - each bidder will carry out a rigorous financial due diligence process.

However, given it will be classed as a ‘trophy asset’, buyers might not be put off by a financial performance that doesn’t reflect the sale price. Whether it’s an inflated price or not, this should not be seen as an indication of the buoyant hotel market in the UK in a wider context, primarily because the Ritz is almost a “one-off””

Newsflash: The European boss of Japanese carmaker Nissan has warned that a no-deal Brexit would threaten the future of its entire EU operations.

Speaking at Nissan’s car plant in Sunderland, Gianluca de Ficchy said that moving to WTO tariffs would be “unsustainable” for the company, as it would make its vehicles uncompetitive.

My colleague Josh Halliday is there:

The NIESR thinktank has crunched today’s GDP data, and concluded that Britain will indeed avoid a recession this year.

They expect the UK post growth of 0.5% in the third quarter of 2019. That would reverse the 0.2% slump recorded in April-June, avoiding two consecutive quarters of contraction (a technical recession).

NIESR says this morning’s data, showing 0.3% growth in the three months to August, is a little stronger than forecast.

But Dr Garry Young, NIESR’s director of macroeconomic modelling and forecasting, points out that productivity is still poor.

“Despite better than expected GDP data, the underlying pace of growth in the United Kingdom is slow. The strongest source of private sector demand is household consumption, driven by real wage growth, but this is not sustainable without a pick-up in productivity growth, and this seems unlikely in the near term.”

My colleague Sean Farrell is at the unveiling of the Turner £20 note -- and reports that Mark Carney fielded questions on the UK economy, the outlook for inflation and interest rates, and his own future.

State of economy

Asked about today’s GDP data, Carney says Brexit stockiling has distorted GDP data in recent months.

“The data is fairly volatile at the moment influenced by a number of Brexit related effects.

“If you cast your mind back to our August report we expected 0.2% for Q3. We have one month to go. The underlying pace of growth is a bit softer than that.”

Succession.

The governor didn’t rule out staying on beyond 31 January 2020 if asked.

“That is a question for the government. As the chancellor indicated in the past few days … they felt they would be on track. We will await the decision of the government at the appropriate time.

The government is focused on a couple of big issues. There is no reason that question would necessarily be asked … There is no need to speculate. There is plenty of time.”

Inflation and monetary policy.

Carney said:

“As you know, inflation has just come down below 2% and the currency remains more volatile than usual because of the relatively wide range of Brexit outcomes that could transpire. The MPC will manage policy to balance the need to bring inflation back to target either from below or above by supporting this economy.

In more dramatic Brexit outcomes we will do whatever we can to support growth but I would remind in that regard that much of the flexibility that the bank has is the responsibility of other committees within the Bank, [especially] the FPC.”

Brexit uncertainty and the US-China trade war are both hurting British industry.

Fhaheen Kahn, economist at Make UK, the manufacturers’ organisation, explains:

“We are 21 days away from the UK leaving the EU and today’s data shows that manufacturing is right in the eye of continued economic uncertainty. There is now a potent cocktail facing the sector of trade wars, a synchronised global downturn in major markets and political chaos which shows no signs of ending.

“The majority of sectors declined with pharmaceuticals and electrical equipment being hit especially hard and vacancies in the sector are also falling rapidly. So long as the current uncertainty persists manufacturing looks as far away as ever from returning to pre-financial crisis levels.”

This chart, from today’s GDP report, shows the damage:

A new round of Brexit stockpiling by nervous businesses and consumers should keep the UK out of recession.

Yael Selfin, chief economist at KPMG UK, says:

“Despite the contraction in GDP in August, the risk of the UK economy falling into a technical recession is still remote, due to strong growth in July. Also a potential new round of stockpiling will likely help boost GDP growth in September and October.

The latest figures are still a cause for concern however, especially as most of the fall comes from the manufacturing sector, which is particularly vulnerable to an adverse Brexit outcome.”

ING economist James Smith predicts that Britain will probably avoid recession in 2019 despite a gloomy August.

He writes:

UK GDP contracted by 0.1% in August, suggesting there is very little to cheer about in the UK economy at the moment.....

That said, the economy will most likely avoid a near-term technical recession. Consumer activity is continuing to grow, even if confidence remains fairly depressed. Shoppers appear to have been less fazed by the ups-and-downs of the Brexit process than businesses.

But even so, economic growth is likely to remain fairly modest for the rest of this year, averaging around 0.2-0.3% per quarter. This means that the Bank of England is likely to remain cautious, although we still feel its probably too early to be pencilling in UK rate cuts.

Although August was weak, July and June were stronger than expected.

The ONS has revised July’s growth up, from 0.3% to 0.4%. June has also been nudged up to +0.1%, from zero.

That’s why the three-month/three-month growth rate hit 0.3%, stronger than expected.

It also means September’s GDP, due in a month’s time, would need to be pretty weak to put Britain into recession.

Former UK chancellor Philip Hammond has warned Brexiteers that their dreams of striking new free trade deals once Britain has left the EU don’t add up.

In an interview with the Daily Telegraph, Hammond explains that such deals would have “very limited” economic value, and certainly wouldn’t compensate for the loss of tariff-free, frictionless trade with the EU.

He’s arguing for a “rapid-fire zero-tariff trade deal with Europe”, even though it would restrict the UK from striking similar deals with other countries.

The Telegraph’s Peter Foster has tweeted the key points:

European stock markets have just dropped smartly into the red, after China launched another broadside at America.

Beijing’s foreign ministry accused Washington of ‘smearing China’ over its crackdown in Xinjiang, by blacklisting companies and refusing to issue visas to officials.

Reuters has the details:

Beijing said on Thursday that comments by U.S. Secretary of State Mike Pompeo accusing China of human rights violations in its treatment of Muslims constituted a smear against China.

Foreign Ministry spokesman Geng Shuang made the comments at a daily briefing Thursday. He did not mention Pompeo in particular.

U.S. Secretary of State Mike Pompeo said in a television interview on Wednesday that China’s treatment of Muslims, including the Uighurs, in western China was an “enormous human rights violation” and Washington will continue to raise the issue.

This has further dampened hopes of a trade deal breakthrough at this week’s talks in Washington, and knocked 0.4% off the pan-European Stoxx 600 index.

Slowing economic growth and weak trade haven’t stopped the rich spend-spend-spending, if the latest results from Moët Hennessy – Louis Vuitton are any guide.

The luxury goods brand, also known as LVMH, grew its sales by 11% in the third quarter of 2019, beating forecasts. Fashion and leather goods sales grew by 19%, led by its largest brands Louis Vuitton and Dior.

LVMH said it had shaken off “the difficult context in Hong Kong” -- clearly demand for expensive handbags and coats falls when protesters and police are clashing in the streets.

LVMH’s shares have jumped 3.8%, this morning, and lifted shares across the luxury sector with Christian Dior up 4.1% and Burberry gaining 1%.

That FT story about divisions at the European Central Bank over QE just lifted the euro to a two-week high.