European stock markets have retreated, reversing earlier gains, while Wall Street opened slightly higher. The Dow Jones is now flat, the S&P 500 has edged 0.1% higher and the the Nasdaq is 0.3% ahead, as a dip in bond yields boosted tech stocks for a third session. In Europe:

• UK’s FTSE 100 down 0.3% at 7,008
• Germany’s Dax down 0.1% at 15,446
• France’s CAC flat at 6,387
• Italy’s FTSE MiB down 0.66% at 24,729

Gold and other precious metals such as silver and palladium have rallied, with spot gold rising above $1,900 an ounce for the first time since January. It hit $1,910 and is now at $1,901.

Federal Reserve officials have confirmed their dovish stance on interest rates in recent days, with Fed vice chair Richard Clarida saying yesterday that the Fed could tame inflation if necessary without throwing the economic recovery off track by engineering a “soft landing”. However, concerns that the Fed could taper its asset purchase programme in the coming months have been weighing on stock markets.

Fed policymakers are now saying that they are getting closer to debating when to pull back some of their crisis support for the US economy.

“We are talking about talking about tapering,” San Francisco Federal Reserve Bank President Mary Daly told CNBC on Tuesday, referring to the potential reduction of the Fed’s $120bn monthly asset purchase programme. Those bond purchases, together with near-zero interest rates, are aimed at easing borrowing costs, enabling companies to hire and invest.

Our main stories today:

Marks & Spencer is to step up store closures after diving £201m into the red as clothing and homeware sales slid by almost a third during the high street lockdowns.

The British drugmaker Vectura Group, which is developing a pioneering inhaled treatment for Covid-19 with a partner, has agreed a £958m takeover by the US private equity house Carlyle Group as it looks set to become the latest in a long line of UK businesses snapped up by private equity during the pandemic.

Airline and holiday firm bosses have joined in attacking the UK government’s “utterly confusing” advice on foreign travel, accusing ministers of “moving the goalposts” and lacking transparency over decisions on safe destinations.

SSE has promised to spend about £2bn on low-carbon energy projects over the next year and expand its renewable energy business overseas.

A Belgian judge has begun hearing an urgent European Commission request for a court order requiring AstraZeneca to deliver millions more vaccines to the bloc, in a case that may reflect the EU’s anger more than its need for doses.

The government faces calls to end the “postcode lottery” for water poverty in England and Wales by creating a social tariff to protect millions of families who struggle to pay for their water bills.

Thank you for reading. We’ll be back tomorrow. Bye! - JK

Gold has risen above the $1,900 level for the first time since January, as US Treasury yields retreated, lifting its appeal. Federal Reserve officials have confirmed their dovish stance on interest rates in recent days, with Fed vice chair Richard Clarida saying yesterday that the Fed could tame inflation if necessary without throwing the economic recovery off track by engineering a “soft landing”.

Spot gold has climbed 0.3% to $1,904 an ounce, after hitting its highest level since 8 January, at $1,910. Other precious metals are also rallying, with palladium up 0.8% at $2,792 an ounce, silver up 0.3% at $28.06 and platinum rising 0.6% to $1,198.

Investors are waiting for key US economic data, including GDP and jobless claims on Thursday, followed by consumer spending on Friday.

European stock markets have turned negative, reversing earlier gains.

• FTSE 100 down 0.4% at 7,002
• Germany’s Dax down 0.3% at 15,422
• France’s CAC down 0.1% at 6,382
• Italy’s FTSE MiB down 0.5% at 24,768

Business confidence has improved strongly in France in May. The business climate index from Insee rose 12 points to 108, climbing above its long-term average of 100 for the first time since February 2020. It is even higher than the pre-pandemic high of 105.

In retail, business climate improved by 17 points, as non-essential stores reopened on 19 May. In the services industry, the index rose 15 points driven by rising optimism in the hotels and food services sectors. In manufacturing, confidence improved by three points.

The easyJet boss, Johan Lundgren, downplayed fears of the spread of the Indian variant stopping holidaymakers from going abroad this summer, saying the evidence was that vaccines were effective enough.

I don’t think that the outlook of this and the likeliness and the probability is that because of the Indian variant the summer is ruined.

However, he warned:

I don’t think that UK aviation as an industry can go through another lost summer without grave consequences. In that case the govt needs to be ready and prepared to step up – it is its restrictions that have made it impossible to operate for players in this industry.

Stock markets have lost some steam, apparently because traders are focusing more on talk of asset purchases being tapered in the US. The main indices in the UK, Germany and Italy have edged 0.1% higher while the French bourse has gained 0.3%.

Joshua Mahony, senior market analyst at the online trading platform IG, says:

European markets have continued the somewhat indecisive theme seen overnight, with both the Dax and FTSE-100 trading largely flat this morning. Despite easing fears around the Indian Covid variant in the UK, we have seen the FTSE-100 continue to tread water.

There has been a growing theme around Fed tapering taking shape of late, and commentary from Fed vice-chair Richard Clarida furthered the point that we could see the rate of asset purchases trimmed in the coming months. However, Clarida also reiterated the crucial view that while inflation has been moving sharply higher, this continues the be viewed as transitory in nature. For markets, the key question is just how long inflation needs to remain elevated for the Fed to no longer view them as temporary.

Gold and other precious metals have been climbing, as reported earlier. Mahony adds:

Rising inflation and falling treasury yields continue to benefit precious metals, with gold rising into a four-month high this morning. The experiences of 2008 highlight how the prolonged growth in the Fed balance sheet should allow for a drawn out gold bull-market well after the original economic collapse. However, with the Fed having acted at greater speed and size in comparison to 2008, the question for gold bulls is just how long we will see the FOMC maintain their accommodative stance.

The Dow Jones is still expected to open about 100 points higher at 34,414 later today.

British Land, one of Britain’s biggest property companies, has reported an annual after-tax loss of £1.1bn following a similar loss in 2020, while underlying profit fell 34% to £201m. But it is encouraged by a return of shoppers to its retail parks in recent weeks.

The company wrote down the value of its portfolio of shops and offices by 10.8%, slashing it by more than £1bn to £9.1bn, as the pandemic led to widespread shop closures during lockdowns while offices stood empty as working from home took off.

The value of its retail assets is down by almost a quarter, but the decline in retail parks has slowed, British Land said. It has sold £1.2bn of assets since April last year, including £556m of retail assets.

The company is hopeful that it can benefit from the pick up in economic activity that is now emerging by aligning its business to “growth and value”. For example, the company is introducing life sciences firms at its Regent’s Place campus.

British Land wants to focus on a few London campuses – Broadgate in the City, Regent’s Place and Paddington Central – and is building a fourth campus, on a 53-acre site at Canada Water in south east London.

In retail, it is investing in high quality, out of town retail parks, as well as warehouses in London. For example, it has bought the A1 Retail Park in Biggleswade and a logistics warehouse in Enfield.

Retail parks make up 53% of its retail portfolio. Simon Carter, the chief executive, says:

We see a value opportunity in retail parks, reflecting increased yields and a more stable occupational outlook. We have been further encouraged by how strongly footfall and sales have rebounded in recent weeks.

These are increasingly preferred by retailers, because they are affordable and support an online offer by facilitating click & collect, returns and ship from store. They are also preferred by business which are more online resilient, including discount food and homeware retailers.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Vectura, one of Britain’s biggest biotech firms, has been taken over by the American private equity group The Carlyle Group in a £958m deal. Wiltshire-based Vectura specialises in inhaled treatments and is working with Inspira Pharmaceuticals on developing an inhaled version of Inspira’s experimental lead drug for the treatment of Covid-19 – a plant-based drug.

The deal comes as it emerged that 123 UK companies worth £36bn have been sold off to private equity since the pandemic started, with 19 more deals worth £16.6bn in the pipeline, the Daily Mail reported, citing data from Dealogic. It is the highest number of firms swallowed up by private equity since the financial crisis. They include household names from Asda to the AA.

Private equity firms have in the past been accused of buying up struggling firms on the cheap and “asset stripping” them before selling them on. The Mail quoted Baroness Altmann, a Tory peer and former pensions minister, as saying:

It’s really important that government and businesses are on the lookout for pandemic plunderers.

In other corporate news, Marks & Spencer has fallen deep into the red over the past year as clothes sales collapsed during the pandemic. It recorded a pre-tax loss of £201m in the year to 27 March against a £67m profit the previous year. Store sales fell 56% due to closures during Covid lockdowns, while food like-for-like sales were up 1.3%. Chief executive Steve Rowe insisted that that company had “moved beyond fixing the basics to forge a reshaped M&S”.

With the right team in place to accelerate change in the trading businesses and build a trajectory for future growth, we now have a clear line of sight on the path to make M&S special again. The transformation has moved to the next phase.

On the markets, gold has risen above the $1,900 per ounce level, helped by a weaker dollar and growing inflation concerns after Federal Reserve officials stuck to a dovish stance on interest rates.

Spot gold is trading up 0.2% at $1,903 an ounce after hitting $1,905 earlier, its highest level since early January.

Richard Clarida, the Fed’s vice chair, said on Tuesday that the Fed could tame inflation if necessary without throwing the economic recovery off track by engineering a “soft landing”.

Asian markets rose, and European and US stock futures are pointing to a higher open. In Asia, Japan’s Nikkei gained 0.45%, Hong Hong’s Hang Seng climbed 0.7% while the Australian stock market dipped slightly.

The Agenda

• 7.45am BST: France business and consumer confidence for May
• 12pm BST: US MBA Mortgage applications for week of 21 May
• 2.30pm BST: UK Treasury Committee hearing on future of financial services