Britain’s blue-chip stock index has closed at its highest level since the pandemic struck Europe back in February 2020.

The FTSE 100 ended the day nearly 0.2% higher, despite the looming prospect of a delay to the end of lockdown restrictions.

Oil giants led the rally, with Royal Dutch Shell up 2.5% and BP gaining 1.9%.

They were boosted by rising energy prices, with a barrel of Brent crude hitting $73.64 per barrel today, its highest since April 2019. Oil was lifted by expectations of rising demand as the world economy recovers from the economic shock of Covid-19.

Shell and BP helped the FTSE 100 index to finish the day 12.6 points higher at 7146.68 points.

That’s its highest close since Monday 24th February 2020 - at the start of last spring’s market crash, after parts of Italy’s Lombardy region went into lockdown in the early stages of the Covid-19 pandemic.

The FTSE 100 had earlier hit an intraday high of 7,188 points, also the highest since late February.

But travel and leisure stocks were hit by the news that the legal limits on social gatherings, and on live events and nightclubs, won’t end next week.

British Airways parent company, IAG, tumbled by nearly 4.2% - the biggest faller on the FTSE 100. Rolls-Royce, which makes and services jet engines, was close behind, falling by almost 4.1%.

Michael Hewson of CMC Markets explains:

Rolls Royce is amongst the biggest decliners as it becomes increasingly apparent that airline flying hours are unlikely to rebound as quickly as anticipated.

In its March update Rolls Royce management estimated a free cash flow outflow of £2bn for 2021, which was based on wide body engine flying hours of 55% of the levels of 2019, with an expectation of turning cash flow positive at the end of the second half of this fiscal year. On current trends this looks an increasingly tough target to achieve.

AB Foods, which owns the Primark clothing chain, dropped by 2.75% while conference organiser Informa lost 2.4%.

Hotel chains Whitbread (-1.8%) and Intercontinental (-1.6%) were also hit by disappointment that the final swathe of restrictions will continue for longer.

The smaller FTSE 250 index, which is more UK-focused, closed marginally higher.

Eateries chain Restaurant Group, which owns Wagamama, Chiquito and Frankie and Benny’s, fell 4.3% while pub chain JD Wetherspoon dropped by almost 4%, as traders anticipated a longer wait before they could end social distancing restrictions.

Losing a month’s extra trade, especially in the summer, will be a blow to hospitality chains, points out Danni Hewson, AJ Bell financial analyst:

“It’s just four weeks, but for some businesses it will be four weeks too many especially as there are no guarantees 19 July will really bring an end to restrictions. There are many reasons to delay, but delay will bring hardship for some, ruined plans for others and the end of the line for a few. My first five jobs were in the hospitality sector, its peaks and troughs made it ideal to amass some cash in long student holidays, but the most important peak for much of the industry is now, so losing the next four weeks is particularly cruel.

“Both the FTSE 100 and 250 tell the tale.

Whitbread, The Restaurant Group and Wetherspoons have all tumbled. With big soirees and June wedding parties seemingly off the cards Primark’s owner Associated British Foods finds itself among the fallers as does the Intercontinental Hotels Group. And with current lockdown measures at home standing still, investors seem to have given up on the likelihood of foreign travel opening up in the short term knocking back Wizz Air, EasyJet, IAG and Rolls Royce Holdings.

Rishi Sunak has rejected business demands for an extension of the furlough scheme despite expectations that the government will delay the easing of Covid-19 restrictions currently set for 21 June.

Business leaders and Labour have said a failure to maintain emergency economic support measures in line with public health restrictions would push struggling businesses into bankruptcy and risk thousands of jobs.

It comes as Boris Johnson is expected to announce the government roadmap out of lockdown in England will be delayed by two to four weeks, amid a rapid rise in cases of the Delta variant first detected in India.

With only a week before all pandemic restrictions were due to be removed, sources close to the chancellor said he believed sufficient economic support measures were already in place to cope with a delay.

Two sources said Sunak had intentionally “gone long” at the March budget by announcing furlough would last until September for exactly this reason.

However, the scheme will force employers to contribute 10% of an employee’s wage from the start of July, rising to 20% in August, as taxpayer support is cut from the current level of 80%. Employees will continue to receive the same amount.

Ed Miliband, the shadow business secretary, said many businesses are worried about economic support being removed while they are still unable to trade or profit

“The price of any delay to the roadmap must not be paid by businesses.”.

Here’s the full story:

In New York, the S&P 500 stock index has dipped back from its record levels in early trading.

Although oil companies and some technology firms are rallying, financials, basic materials, industrial stocks are lower on Wall Street.

• S&P 500: down 9 points or 0.2% at 4,238 points
• Dow Jones industrial average: down 135 points or 0.4% at 34,343 points
• Nasdaq Composite: up 27 points or 0.2% at 14,097 points

On the Dow, cloud CRM company Salesforce.com (+2.5%), tech giant Apple (+1.2%), aerospace manufacturer Boeing (+0.6%) and energy firm Chevron (+0.6%) are the only risers among its 30 members.

Retailer Walgreens Boots (-1.75%) are the top faller, followed by network equipment maker Cisco (-1.6%), DIY retailer Home Depot (-1.4%) and chemicals firm Dow Inc (-1.4%).

Back in the City, travel and hospitality stocks are pulling the FTSE 100 away from this morning’s pandemic high.

Rolls-Royce, whose jet engine servicing operations have been hit by the drop in flights since the pandemic began, are now down 4.1%. British Airways parent company IAG are down 3.7%.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown says the looming delay to the end of lockdown restrictions is hitting the travel sector.

‘’With freedom set to be pushed back over the horizon, and a four week delay is expected to be announced to the full re-opening of the economy, aviation stocks have been hit with a burst of fresh turbulence.

Aircraft engine manufacturer Rolls Royce and British Airways owner IAG are the biggest early fallers on the FTSE 100 today, with the expectation that continued domestic restrictions are likely to be a sign that quarantine rules will also stay in place for longer, pushing back the recovery for the airline sector....

With the travel traffic lights unlikely to change from red and amber any time soon, that’s also pushed EasyJet (-2.5%) down.

Conference organiser Informa is also falling, down 3.4% today, on disappointment that in-person events may be delayed for longer.

Streeter adds:

The events business has been one of the biggest corporate casualties of the pandemic, and Informa, the provider of global conferences, has been no exception.

It has tried to generate revenues from virtual and hybrid events, but they are far from the cash cow that major in person events provide.

Hospitality firms are also weaker, with Premier Inns operator Whitbread down almost 2%, and Restaurant Group (which runs Wagamama and Frankie & Benny’s) falling 3.4%.

Pub chain JD Wetherspoon are down 2%.

The FTSE 100 is still on track for a new pandemic closing high, up 11 points at 7145, having hit 7188 points this morning for the first time since February 2020.

Production at eurozone factories picked up speed in April as the region recovers from its Covid-19 recession.

Eurozone industrial production rose 0.8% month-on-month in April, twice as fast as economists expected. That followed a 0.4% rise in March, and a 1.2% contraction in February, as Covid-19 restrictions hit the sector.

April’s increase was driven by a 3.4% increase in production of durable consumer goods (longer-lasting items such as electrical appliances, electronic products and furniture), while energy production was 3.2% higher.

Production of capital goods (physical assets such as machinery, buildings and tools) rose by 1.4%, while intermediate goods production (used to make final products) was 0.8% higher.

Non-durable consumer goods production dipped 0.3%.

On an annual basis, eurozone industrial production was over 39% higher than a year ago - when Europe was locked down after the first wave of Covid-19 infections.

Josie Dent, managing economist at CEBR, says this pickup in industrial output provides evidence that the eurozone economy is emerging from the double-dip recession that it first entered in Q1 2020.

She explains:

“Today’s eurozone industrial output growth of 0.8% in April beats expectations of a 0.4% monthly expansion.

This is an encouraging sign of recovery as vaccinations pick up pace and restrictions ease. Cebr expects 4.3% eurozone GDP growth in 2021.”

But Dent adds that the Delta variant of the virus poses a risk to this recovery, as it has started to spread in the continent.

She also points out that there was considerable variation across Europe’s factories in April:

Monthly output growth was fastest in Belgium, with production rising by 7.4%.

At the other end of the scale, a contraction of 2.4% was witnessed in Lithuania. Lithuania was in a nationwide lockdown for the majority of April, with restrictions easing at the end of the month.

The Institute of Directors says it is “vital” that the government extends its support packages for businesses, if England’s lockdown rules continue beyond 21 June.

Dr Roger Barker, the IoD’s Director of Policy, warns that a ‘cliff edge’ is approaching as support measures start to wind down, so any changes to public health measures must be matched by economic help.

“Clearly this is a blow for many businesses, particularly those in the retail and hospitality sectors.

“We are now approaching a cliff edge, with government support for business ending or beginning to taper off. It is vital that this support is pushed out commensurately with the lockdown extension.

Economic support and public health measures must be aligned.”

The IoD points out that businesses face several ‘new significant costs’ at the end of this month, unless the government acts:

• On 23 June, quarterly rent is due
• On 30 June, the ban on commercial rent evictions ends
• On 1 July, employers must start contributing 10% towards furlough costs
• On 1 July, 100% business rates relief tapers off to 67% business rates relief

The outsourcing company Serco has upgraded its profit forecast thanks to continuing strong revenues from its lucrative contract to run parts of the government’s Covid-19 test-and-trace service.

The company said this morning its underlying trading profit for 2021 would be £15m higher than previously thought, at about £200m.

Shares rose 5% in early trading to a one-month high.

Serco runs large parts of the largely privatised service, which is labelled as NHS test and trace. It runs a quarter of the testing sites and half the “tier 3” contact tracers, who are mainly tasked with phoning the contacts of people who have tested positive.

The outsourcing firm’s appointment to run parts of the test-and-trace system has proved controversial. The Labour party leader, Sir Keir Starmer, described as “outrageous” Serco’s decision to pay investors a £17m dividend that was funded partly by pandemic profits.

Here’s the full story:

Restrictions on weddings in England could be eased should Boris Johnson announce a delay in lockdown easing, the health minister Edward Argar has suggested.

With the prime minister expected to announce a four-week delay to the lifting of all restrictions on Monday evening, Argar said couples waiting to wed were “very much” in Johnson’s mind.

“There will be a lot of couples who planned, hoped, to do it, put a line through it, done it again and rescheduled again,” Argar told Sky News.

“Not only does that cost money, but emotionally that is incredibly difficult for couples who want to have their special day and want to get married.”

Though he refused to pre-empt what Johnson would announce, Argar said:

“I know that weddings and people in that particular situation will be very much in his mind at the moment, it’s one of the things he has been looking at.”

Under stage four of the government’s roadmap out of lockdown all legal limits on social contact in England are scheduled to be removed on 21 June. Johnson is also expected to address the issue of support for businesses should the 21 June easing be delayed when he sets out his plans.

Asked if the furlough scheme would be extended, Argar replied:

“I know that when he addresses his decision, sets out what he intends to do around the easing on the 21st, he will address those points as well. I think he is very mindful of the need for businesses and others to get the support they need if they continue to be locked down or unable to open.

But I don’t want to pre-empt what he will say, but I know he is very sensitive to those factors.”

We flagged earlier that Argar has indicated some new support for businesses will be forthcoming.

The FTSE 100 index of blue-chip shares has hit its highest level since February 2020, when the first wave of Covid-19 sent markets crashing.

The FTSE 100 touched a new 15-month high of 7188 points in early trading, up 0.75%, despite the prospect of a delay to the final easing of England’s lockdown weighing on travel stocks.

Oil giant Royal Dutch Shell is leading the rally, up 2% following the jump in oil prices this morning, with BP up 1.35%.

Telecoms firm BT (+1.8%) is also rallying: last week, Altice, the telecoms group controlled by the billionaire Patrick Drahi, surprised the City by taking a 12% stake in BT.

Housebuilder Persimmon (+1.4%) and precision engineering firm Renishaw (+1.5%) are also in the risers, along with Just Eat Takeaway, the online food ordering and delivery firm (+1.7%) and safety equipment manufacturer Halma (+1.75%).

The oil price has hit its highest level in over two years, on the prospect of a jump in demand as the pandemic eases.

Despite concerns over the Delta variant, oil traders seem confident that oil usage will pick up as vaccination programmes help the world economy to recover.

Brent crude, the industry benchmark, has jumped 1% today to touch $73.52 per barrel, its highest since April 2019. That extends its sharp recovery since the first wave of Covid-19 sent prices spiraling last year.

US crude has jumped almost 1% too, to around $71.50, its highest since October 2018.

The world’s demand for oil is expected to rebound to pre-pandemic levels by the end of 2022, the International Energy Agency predicted on Friday.

It said Opec+ must ‘turn on the taps’, having cut production when the virus hit.

Naeem Aslam, chief market analyst at Avatrade, says:

As the economy continues to recover from coronavirus, OPEC and its allies will need to increase supply to meet the surge in consumer demand.

Having said that, traders should keep in mind that the ongoing nuclear deal negotiations between the US and Iran are likely to take effect soon. Iran is in a strong position to increase its oil supply in a relatively short period of time, which could result in a significant retracement of global oil prices.

In the City, shares in travel companies and hospitality firms have dipped in early trading as a delay to lockdown easing looks increasingly likely.

Casino and bingo club operator Rank Group (-1%), pub chain JD Wetherspoons (-0.9%) and cinema operator Cineworld (-0.85%) are all lower, as investors anticipate longer delays before venues can operate ‘as normal’ again.

Shares in airline group IAG, which owns British Airways, are down 1.7%, with budget airline easyJet down 1.6%.

Rolls-Royce, which makes and services jet engines, have dropped 2%, making it the biggest faller on the blue-chip FTSE 100 index.

Richard Hunter, head of markets at interactive investor, says:

In the UK, the likelihood of an extension to the current lockdown restrictions is something which the market is expecting.

Hospitality and travel stocks in particular have seen another downward lurch, with the additional complication of certain of the government assistance schemes also nearing an end. There is therefore likely to be something of a compromise along the way, as the government is likely to play the cautious health card ahead of completely letting the economy loose.

A government minister has indicated that businesses will get more support, if the easing of lockdown restrictions is delayed.

Reuters has the details:

More government support for businesses is likely if there is a delay to easing Britain’s lockdown restrictions, junior health minister Edward Argar said on Monday.

British Prime Minister Boris Johnson is expected to announce later on Monday that the end of COVID-19 restrictions due on June 21 will be delayed following concern about the rapid rise of infections from the Delta variant of the coronavirus. read more

“Were he (the PM) to make an announcement that he’s delaying it, I would expect him to address that issue as well at the same time,” Argar told the BBC when asked if there would be extra support for businesses.

The Night Time Industries Association has warned that some firms will collapse unless they get support to handle a delay in the easing of lockdown in England.

An NTIA ‘flash survey’ of 300 ‘night time’ businesses, such as nightclubs, found that one in four would not last longer than a month without more help, if restrictions are extended beyond 21 June.

Many have already invested in preparations to reopen from next week, and are losing revenues while closed or operating under restrictions.

NTIA says:

• 1 in 4 businesses will not survive longer than one month without further Government support and 50% no longer than two months.
  
• 54% of businesses have spent over £15K in preparation for reopening on 21st June already and 17.8% have spent over £40K.
  
• 1 in 5 businesses estimate they will lose over £40K per week in revenue whilst restricted from trading or closed due to the delay in the 21st June easing of lockdown.
  
• 58% of businesses estimate they will lose over £10K per week in revenue whilst restricted from trading or closed due to the delay in the easing of lockdown on 21st June.
  
• 33% of businesses estimate they will lose over 30% of their workforce due to the delay in the easing of lockdown on 21st June.

Michael Kill, NTIA CEO says a delay to ending restrictions will delay will drive confidence in the sector to a new low, and lead to job losses.

NTIA are calling for an extension to business rate relief, and the moratorium on evictions on firms in rent arrears (with an estimated £2.5bn owed to landlords). They also want the government to extend the “restriction grant” to firms unable to open due to Covid-19 rules, and the holiday on repayments on pandemic support loans.

NTIA has also called for the government to extend the temporary 5% reduced VAT rate on hospitality (which is due to rise to 12.5% at the end of September), to help firms recover.

Kill says:

“These businesses are overburdened with debt, so any decision to delay will make them heavily reliant on the Government to extend financial support and relief, including additional restriction grants, exclusion from furlough contributions, extension of loan repayment holiday for CBILS/BBS as well as business rates and VAT relief for the next 12 months, not forgetting the £2.6bn in commercial rent debt left unresolved. ”

Kill also warns that the government must give clarity on when firms can reopen, or face a challenge from the industry.

“Distressed industries cannot continue to be held in limbo, as businesses are left to fall, any decision to delay without clarity on when they can open will leave us no other option but to challenge the Government, standing alongside many other industries who have been locked down or restricted from opening for an extreme length of time, through no fault of their own, and at their own cost.”

My colleague Rob Davies reported on Friday that the NTIA was understood to be weighing up legal action on behalf of venues such as nightclubs that have spent money to be ready to welcome guests after a year of enforced closure.

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

UK businesses are calling on the government to extend emergency Covid-19 support as Boris Johnson prepares to delay the end of lockdown restrictions by up to a month.

The PM is expected to announce a four-week delay to the final easing of lockdown restrictions in England, from 21 June, due to the rapid rise in cases of the Delta variant first detected in India.

Kate Nicholls, UKHospitality chief executive, said this morning that a one-month delay would be devastating for the sector, which has been hit particularly hard by the pandemic.

She told the BBC this morning that ministers must offer more support, including extending a moratorium on evictions and debt collection from commercial tenants that is due to lift on June 30.

If legal restrictions on social contact are not ended, then sports, pubs and cinemas will still face capacity limits, and nightclubs would stay closed.

A report earlier this month showed that nearly a quarter of licensed premises in Britain remain closed, because the current restrictions and space constraints make operating simply unviable.

Many of those businesses are “running out of road” after 16 months without revenues, Nicholls warned. And for the rest, 21st June was the day when they could start to trade profitably again, she explains.

A four-week delay would cost the hospitality sector around £3bn in lost sales, Nicholls said. So it’s crucial that the government provides help in several key areas.

One is Rent arrears. Hospitality firms currently owe £2.5bn in unpaid rent, built up since the first Covid-19 lockdowns. Nicholls says it’s vital that the moratorium on demands for commercial rent arrears, due to expire on 1 July, is extended.

Those protections prevent landlords from evicting commercial tenants or using statutory demands or winding-up petitions to recover rent arrears.

Nicholls says hospitality firms also need more breathing space on business rates, as a £100m bill is due to hit the sector in July when the current temporary exemption expires.

Such help will assist hospitality firms to keep operating, bring more people back to work, and repair their “shattered balance sheets” after sixteen months of below-profitability trading, she adds.

The government is also facing calls to delay the winding down of the furlough scheme, which currently pays 80% of wages to sidelined staff.

From July 1st, the Government’s share will fall to 70% with employers contributing 10%, as part of a withdrawal timetable that will see furloughing finish at the end of September.

But if some hospitality firms cannot open, and other companies are still operating under Covid-19 limits, then they will struggle to meet that new cost.

Claire Walker, co-executive director of the British Chambers of Commerce, said (via The Times):

“We would be calling for the government to provide further cash grants, at least equivalent to levels provided during the first lockdown, and to delay the tapering of government payments into the furlough scheme, planned for the start of July.”

The decision on extending restrictions beyond 21 June will come this evening. But a delay looks inevitable, with ministers have been told that a four-week delay to easing all Covid restrictions would probably prevent thousands of hospitalisations.

The agenda

• Today: CBI holds Road to Zero conference on climate change
• 10am BST: Eurozone industrial production
• 2pm BST: Bank of England governor Andrew Bailey speaks at the Association of Corporate Treasurers’ Annual Conference