And finally, European stock markets have ended the day higher.

In the City, the London stock market finished 11 points higher at 7027 points.

Construction rental group Ashtead led the rises, up 5.2% after saying earnings would be ahead of forecasts in a strong earnings update.

Travel stocks held their gains, with IAG up 3.9% higher.

But mining companies still lagged, with Anglo American down 4.5% and Rio Tinto down 4%.

The wider Stoxx 600 gained 0.44%, with gains in France, Germany, Italy and Spain.

On that note, goodnight! GW

Here are today’s stories so far:

US retail sales unexpectedly rose in August as a pickup in purchases across many categories more than made up for weaker demand for cars.

US retail sales jumped by 0.7% in August, the Commerce Department reports, much stronger than the 0.8% fall expected -- as retailers kept shifting stock despite the global supply chain problems.

That follows a downwardly revised 1.8% decline in July, and suggests that demand was more resilient than expected last month (despite the slowdown in hiring in August).

If you exclude motor vehicle and parts, and gasoline sales, then underlying retail sales were 2.0% stronger in August.

Furniture and home furnishing sales jumped 3.7% in the month, while food and beverage spending was up 1.8%, and general merchandise rose 3.5%.

On an annual basis, total retail and food sales were 15% stronger than in August 2020, when the US was emerging from the first wave of Covid-19.

Over the last year, clothing and clothing accessories stores were up 38.8% compared with August 2020, while gasoline stations were up 35.7%.

Marwan Forzley, CEO of payments platform Veem, says:

Retail sales saw a 0.7% increase in August as consumers prepared for an in-person back to school season.

Spurred by a surge in back to school shopping, consumer confidence soared as businesses reopen and normalcy returns, indicating the continuation of an economic recovery. The Delta variant has proved to have little effect on consumers who have continued to dine at restaurants and bars, and are expected to continue this behavior into the Fall.

The approaching holidays also give consumers even more of a reason to spend, giving way to an expected increase next month.

The number of Americans filing new claims for unemployment support has risen by 20,000.

There were 332,000 new ‘initial claims’ for jobless support in the week to September 11th, up from 312,000 in the previous seven days, on a seasonally adjusted basis.

But... the four-week moving average was the lowest since March 2020, when the pandemic hit the US economy, at 335,750.

If you strip out seasonal adjustments, the number of initial claims actually fell by over 23,000 to 262,619.

Another 28,456 self-employed and gig economy workers filed claims through the Pandemic Unemployment Assistance programme - a sharp fall. That programme officially wrapped up this month, but people who didn’t claim before can still apply.

UK companies have suffered a sharp rise in recruitment problems, with a lack of EU applicants following Brexit partly to blame.

The Office for National Statistics reports that 41% of companies with at least 10 staff said they were struggling to fill vacancies in the two weeks to 5th September, up from 32% in early August.

Across all firms (including the smallest), 13% reported recruitment difficulties late last month, up from 9% in early August.

Hospitality businesses are struggling the most with unfilled roles. Some 30% said that vacancies were more difficult to fill than normal.

Tuesday’s jobs report showed that the number of vacancies in the UK hit a record high in August, with over 1m positions unfilled.

The ONS says that “a lack of EU applicants” is contributing to recruitment challenges, particularly in transport and storage -- where the shortage of lorry drivers is hurting UK supply chains.

Businesses reported that “a lack of suitable applicants” was the main reason for being unable to fill vacancies in late August 2021.

A quarter said a reduced number of EU applicants was a factor -- which rose to 46% among transport and storage businesses.

Nearly half of transport and storage companies also blamed “other reasons”, the ONS explains:

The survey question allows multiple responses, so it could be that some businesses are experiencing recruitment challenges because of a lack of EU applicants as well as “other reasons” (which could include border controls, retirements or difficulty in getting an HGV licence at short notice).

Some EU workers have left the labour market during the coronavirus (COVID-19) pandemic. The number of EU nationals employed in the UK fell by 8.7% between January to March 2020 and April to June 2021. Meanwhile, the total number of people in employment fell by 2.4% over the same period.

Industries experiencing recruitment challenges because of reduced EU applicants have also been affected by a fall in EU workers, according to the Business Insights and Conditions Survey (BICS).

In early August, transport and storage and hospitality businesses were the most likely to say they had fewer EU workers than in previous years (7%).

Marks & Spencer has blamed Brexit for forcing the closure of 11 of its French stores because of problems supplying them with fresh and chilled foods.

The UK retail giant said this morning that all 11 franchise stores it operates with partner SFH in France would shut “over the coming months” (confirming reports over the weekend).

It said supply chain problems since Brexit had made it “near impossible” to maintain standards of food supply.

Nine M&S stores run at French travel hubs with Lagardere Travel Retail will continue to operate.

M&S says:

The lengthy and complex export processes now in place following the UK’s exit from the European Union are significantly constraining the supply of fresh and chilled product from the UK into Europe and continuing to impact product availability for customers and the performance of our business in France.”

The stores, which are located mainly on the high streets of Paris, are set to close by the end of the year.

Paul Friston, managing director of M&S International, said:

“M&S has a long history of serving customers in France and this is not a decision we or our partner SFH have taken lightly.

“However, as things stand today, the supply chain complexities in place following the UK’s exit from the European Union, now make it near impossible for us to serve fresh and chilled products to customers to the high standards they expect, resulting in an ongoing impact to the performance of our business.”

Food supplies could be disrupted if Europe’s fertiliser industry is forced to cut output because of the surge in gas prices.

Commodity market experts ICIS (the Independent Commodity Intelligence Services), says the suspension of work at two UK fertiliser plants in Billingham and Ince could have serious consequences, depending how long they are offline for.

ICIS report that:

Supply of the food that we eat could be severely hampered by European halts in output by major fertilizer producers because of record high gas costs.

One major supplier of nitrates to northwest Europe reacted to the news that CF Industries had shut its two facilities in the UK, saying: “That is indeed alarming. I am on a business trip and the phone doesn‘t stop ringing because of the situation.”

Another major supplier of fertilizer to the UK market said: “For sure, this is a mega event. All depends on how long CF will be offline.”

In an already tight market, where the price of ammonium nitrate (AN) and calcium ammonium nitrate (CAN) are already at post 2008-2009 economic crisis highs, this could be severely damaging to the consumer, the farmer and producers of nitrogen fertilizers.

Wholesalers had been delaying purchases for spring 2022 application in the hope that prices would start to come down, but clearly this will no longer be the case, in the near-term at least.

Over the past days, there has been plenty of speculation about Russia producers cutting output or halting production because costs far outweigh the cost of the final product. This includes urea, CAN, AN and urea ammonium nitrate (UAN), all used as fertilizers for a whole host of essential foods consumed.

More here: Nitrates supply disruption could impact food supply

Hong Kong’s stocks have closed at its lowest level this year, as the Evergrande crisis hits shares.

The Hang Seng share index ended 1.5% lower, at its weakest close since November 2020 - just before Pfizer’s successful vaccine trial results sparked a global rally.

Here’s Reuters take:

Emerging market stocks fell 0.8% on Thursday, putting them on course for their worst week in a month on investor fears of contagion from a potential downfall of embattled Chinese property developer Evergrande.

Shares in China’s no. 2 property developer lost 6.4%, taking losses so far this week to near 30%, after it applied to suspend trading of its onshore corporate bonds following another downgrade.

Hong Kong stocks dropped to their lowest this year, and mainland shares gave up more than 1% as other property stocks also sold off.

MSCI’s index of EM shares has fallen every day this week due to China’s increasing business regulations, weak economic data and Evergrande woes.

Given that the impact on China’s credit market has been focused on the property sector and only on those names that have had trouble raising funds, the impact on other sectors as well as broader emerging markets should be limited, said Eugenia Fabon Victorino, head of Asia strategy at SEB in Singapore.

“But it would really depend on how this is resolved. Historically the resolution of defaults in China has been quite fast although there has been a process wherein the domestic stakeholders have a limited fallout,” she said.

“Limiting that will also limit the risk of this becoming a systemic risk... The big banks in China are comfortably above the regulatory capital ratios, and should be able to take the hit.”

Back in UK retail, supermarket group the Co-operative has urged the government to do more to solve the shortage of HGV drivers, after swinging to a loss in the first half of the year.

The Co-op reported an underlying pre-tax loss of £15m for the six months to 3rd July, down from a £56m profit a year ago.

This is partly due to “significant costs, impacts on sales and profit erosion” due to product shortages and the ongoing effects of Covid, it said.

The Co-op warned that profits for the full-year will be hit:

The unplanned supply chain challenges and ongoing Covid costs will bring greater levels of uncertainty. This will in turn apply pressure on our prior expected level of profitability for year end.

Chief executive Steve Murrells says the government must intervene to fix the shortage of lorry drivers, telling Reuters that:

“This won’t be solved in isolation, this is a global issue where the supply chain has completely broken down,”

“You can’t solve (a shortage of) 90,000 HGV drivers in isolation, it needs a structural change.”

More here: Solving UK driver shortages needs government help -Co-op CEO

Over to you, Michael Gove....

Many industry bodies have urged the government to add HGV drivers to the shortage occupation list, so EU drivers could be given visas to work in the UK.

The surge in gas prices has forced a major fertiliser producer to halt operations at two UK plants.

CF Industries Holdings announced late last night that it is halting operations at its manufacturing complexes at Billingham, in County Durham, and Ince (just south of the River Mersey) in Cheshire.

The company, which manufacturers hydrogen and nitrogen products, blamed the move on “high natural gas prices”, adding:

The Company does not have an estimate for when production will resume at the facilities.

It’s a sign that the record rally in gas and power prices is threatening to slow the region’s economic recovery -- with UK steel producers also saying they have paused work due to high prices.

Natural gas is a crucial component in the production of fertilisers, as well as being used to power the process, so the surge in wholesale gas prices will have pushed up CF’s feedstock costs.

In the Haber process, manufacturers combine hydrogen (typically from methane) with nitrogen from the air to produce ammonia, which is then converted into ammonium nitrate, for use in fertilisers.

John Lewis Partnership reduced its losses to £29m in the first half of its financial year, as it benefited from business rates relief, but paid out millions of pounds in redundancy payments and property closure costs.

The group behind John Lewis and Waitrose said it had benefited from £58m of business rates relief and would decide if it would return that to the government by March next year as it faced “significant uncertainty” about trading over the important Christmas period.

Sales for the group rose 6% to almost £5.9bn in the first half to 31 July, despite high street lockdowns and the permanent closure of 16 department stores and several supermarkets. About 300 people left the business in the half year, but the group has previously announced that it is consulting staff on more than 2,500 job cuts.

The group has benefited from its significant investment in online shopping.

Sales at Waitrose rose 2% year on year and were 10% higher than pre-pandemic levels, largely driven by online expansion. John Lewis’s department store sales rose 12%compared with the same period last year, and were 1% better than pre-pandemic levels.

Here’s the full story:

Sharon White, the chairman of the John Lewis Partnership, has warned that the company faces ‘significant uncertainty’ as it approaches the crucial Christmas trading period.

Presenting today’s financial results to the group’s staff, or partners, she says:

Traditionally, our profits are skewed to the second half of the year because of the importance of Christmas, especially in John Lewis. As we look ahead, there is significant uncertainty. Like the whole of retail, we are managing global supply chain challenges and labour shortages. We are seeing inflationary pressures, which we expect to persist.

White explains that John Lewis is taking ‘a raft of measures’ so it can deliver a successful Christmas, including recruiting more drivers, and hiring 7,000 temporary staff for the seasonal rush.

But she warns that this winter will be particularly challenging:

Given the back ended nature of our trading year, we do not generally provide an outlook. And this year we face additional uncertainty. Even with the success of the vaccination programme the course of the pandemic this winter is hard to call.

The tobacco company Philip Morris International (PMI) has sealed its controversial £1.1bn takeover of the asthma inhaler maker Vectura, after more than half of the target company’s shareholders agreed to sell their stock.

PMI said it had either bought shares, or received acceptances of its offer, reaching just under 75% of the company, well ahead of the 50% it needed.

The offer has become “unconditional”, meaning the remaining shareholders cannot prevent it and can in effect be compelled to sell.

The takeover of a respiratory disease specialist by a cigarette company has sparked outrage among health charities and public health experts around the world.

But the Marlboro maker has argued that its transition away from cigarettes requires it to move into fields such as respiratory medicine, where it already has some expertise.

Jacek Olczak, the chief executive of PMI, said on Thursday:

“We are very excited about the critical role Vectura will play in our Beyond Nicotine strategy and look forward to working with Vectura’s scientists and providing them with the resources and expertise to grow their business to help us achieve our goal of generating at least $1bn in net revenues from Beyond Nicotine products by 2025.”

Vectura investors had been given until 15 September to decide whether to sell to PMI, which claims to have ambitions for a “smoke-free” future, but still generates three-quarters of its revenue from cigarettes.

Under market rules governing takeovers, PMI was not allowed to build its stake by buying shares from investors within the US.

But it was able to buy stock from other international investors to move closer to its 50% target. It said in August that it had gathered 29% of the stock, as it sought to reach 50%.

At that point, which PMI has now reached, reluctant shareholders have little incentive to hold out because PMI would take control of the company anyway. PMI said on Thursday morning that investors could still their shares to it until 30 September.

Sarah Woolnough, the chief executive of Asthma UK and the British Lung Foundation, said:

“Vectura has sold out millions of people with lung disease, and instead prioritised short-term financial gain over the long-term viability of Vectura as a business. Vectura is now owned by a tobacco company, and this could cause considerable problems, such as the firm being excluded from research and clinical networks. It creates perverse incentives for PMI to sell more of its harmful products so they might then profit again through treating smoking-related diseases.

“There’s now a very real risk that Vectura’s deal with big tobacco will lead to the cigarette industry wielding undue influence on UK health policy.”

Hong Kong’s Hang Seng took the biggest hit today, sliding by 2% while China’s SSE Composite and CSI 300 indices are now down over 1% in late trading.

Japan’s Nikkei also felt the ripples, dipping 0.6%, while South Korea’s KOSPI has lost 0.9%

Kyle Rodda of IG says there’s a certain amount of of angst in the markets:

The regional issues very much revolve around continued concerns about growth, China’s crackdown on its private sector, as well the unfolding collapse Chinese property developer Evergrande group, as talks of some sort of restructuring gather steam, after a suspension in the trading of the company’s bonds were announced.

Overall, markets in Asia, and globally at that, remain still in a very angsty environment, with volatility creeping up as calls grow for a perhaps prolonged patch of weak risk sentiment.

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

The liquidity crisis at Evergrande, China’s second largest property developer, is weighing on the market mood today -- with the surge in energy prices also causing investors growing concerns.

Evergrande, which has total liabilities over $300bn, is scrambling to raise funds as it teeters between a messy meltdown with far-reaching impacts, a managed collapse or a government bailout.

And today, Evergrande’s onshore unit has halted trading in all bonds after a domestic rating cut put it among the country’s riskiest issuers.

Fears over Evergrande’s ability to repay investors have risen in recent weeks, triggered protests and creating anxiety over the implications of a collapse.

Yesterday, Chinese authorities told Evergrande’s major lenders not to expect interest payments due next week on bank loans, taking the cash-strapped developer a step closer to one of the nation’s biggest debt restructurings.

And earlier today, Evergrande’s main unit, Hengda Real Estate Group Co Ltd, applied to suspend trading of its onshore corporate bonds, following credit rating downgrades from rating agencies China Chengxin International (CCXI) and S&P - and increasingly jittery trading.

Reuters explain:

Suspension of trade in Hendga’s onshore corporate bonds indicates an increasing likelihood of defaults and restructuring, market participants said.

A bond trader, who declined to be identified, said that the changes in the trading mechanism were likely aimed at limiting participation and curbing volatility.

“Many companies would adjust the trading mechanism of their bonds ahead of default,” he said.

The crisis is knocking shares across the property sector, at a time when China’s housing sector already appears to be slowing.

China’s CSI 300 stock index has dropped almost 1% today, with Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA reporting that Evergrande is “weighing on sentiment”.

The Evergrande saga, with its $300 billion of liabilities is reaching an endgame, with EverTeflon running out of non-stick material. I can see the mother of all debt/equity swaps being “encouraged” by the government, but in the meantime, the combination of the toxic cocktail outlined above will weigh on China equities.

As I have said previously, buying the dip is a perilous business right now in China.

Buying energy is becoming a challenging task too, with wholesale prices of gas and electricity surging to record levels in recent days.

The shutdown of one of Britain’s most important power cables importing electricity from France after a fire has added to the UK’s supply crunch and record high market prices.

These record prices are going to drive up energy costs for companies -- eating into profitability -- and also hit consumers in the next year once bills soar in response.

More seriously, these record prices are also forcing some factories to halt operations -- suggesting the energy crisis could hit economic growth, as we’re only just going into the autumn....

UK Steel director general, Gareth Stace, says some steel factories have already been forced to pause operations.

“These extortionate prices are forcing some UK steelmakers to suspend their operations during periods when the cost of energy is quoted in the thousands per megawatt hour; last year, prices were roughly £50 per megawatt hour.

Even with the global steel market as buoyant as it is, these eye-watering prices are making it impossible to profitably make steel at certain times of the day and night.

Jim Reid, Deutsche Bank strategist, told clients this morning that:

There [are] growing concerns in the UK as a cable bringing power in from France was knocked out by a fire, which will put it out of action until at least October 13, possibly into 2022 for full capacity.

Tight supplies that haven’t been replenished as much as expected after a cold winter are partly responsible, but there’s also a lack of coal options as increasing numbers of plants are phased out, and Russia has sent less supplies to Europe than expected.

Investors are also watching for the latest US retail sales figures, which will show whether the Delta variant hit consumer spending in America last month.

European stock markets are expected to open higher, with the FTSE 100 called up 0.2%.

The agenda

• 7am BST: Eurozone new car registrations for August
• 9.30am BST: ONS realtime UK economic indicators
• 10am BST: Eurozone trace balance for July
• 1.30pm BST: US weekly jobless figures
• 1.30pm BST: US retail sales for August