In Europe, stock markets are also pushing higher.

• UK’s FTSE 100 flat
  
• Germany’s Dax up 0.83%
  
• France’s CAC up 0.45%
  
• Italy’s FTSE MiB up 1.05%
  
• Spain’s Ibex flat
  

Wall Street futures are edging higher, supported by expectations of strong corporate profits as the first-quarter earnings season gets under way and easing geopolitical tensions over Syria.

Analysts are expecting quarterly profits at S&P 500 companies to be 18.5% higher than a year ago, the biggest gain in seven years, according to a Thomson Reuters poll.

And in his latest tweet Donald Trump toned down his threats of military action in Syria.

The Organisation for Economic Cooperation and Development – the west’s leading economic think tank – has called on governments to use inheritance tax to reduce wealth inequality.

Here is our full story on IAG’s potential bid for low-cost carrier Norwegian.

Michael Hewson at CMC Markets UK has had a closer look at Norwegian, which has undergone an “explosive growth path” in the past few years - raising concerns that the airline might be overextending itself.

In its most recent numbers Norwegian posted a bigger than expected net loss for the last three months of 2017 of $117m, down from a small profit a year before. Its rising costs in the form of new transatlantic routes has seen its costs rise quite sharply in recent years and expects to grow its capacity by 40% in 2018.

Management plan to expand the fleet of operational aircraft to more than 190 planes by the end of 2019, from about 150 now, which when you consider the company only had 68 aircraft in 2012 is quite a sharp expansion.

Its success in eating into the market share of its peers like Ryanair and Easyjet as well as forcing down prices on long haul routes has inevitably raised concerns that in a competitive market it could be getting ahead of itself.

In a sign that it was having an effect in squeezing its competitors Ryanair CEO Michael O’Leary, never one for holding back, claimed last September that Norwegian wouldn’t survive the winter due to its ambitious expansion plans, and rising costs, prompting a withering response from Norwegian management that he was sore at losing his pilots to the rapidly expanding airline.

We have seen in the past how over rapid expansion by accumulating too much debt can quickly get out of hand.

Norwegian Air has told Reuters that it did not know of IAG’s interest until it saw the press reports on Thursday morning. The airline added that it has not held any discussions with IAG, and that the BA owner’s interest confirms the potential of Norwegian’s business model and its growth prospects.

The deal would greatly expand IAG’s exposure to budget flying.

Norwegian’s shares have been suspended from trading on the Oslo stock exchange, after they soared as much as 28%.

IAG, formed by the 2011 merger of Iberia and British Airways, bought Irish airline Aer Lingus in 2015 and Spanish budget carrier Vueling in 2013.

The Guardian’s transport correspondent Gwyn Topham wrote this piece about Norwegian a year ago:

British Airways owner IAG is considering a bid for Norwegian Air, Bloomberg is reporting. The news sent Norwegian shares soaring by more than a quarter. They are now 14.3% ahead while IAG shares are down 1.7%, after falling as much as 3.4%.

Chris Beauchamp, chief market analyst at online trading firm IG, sums up the action so far on financial markets.

‘Steady but cautious’ is the best way to describe stock markets in Europe and the UK this morning. The British cabinet meets later to decide on military action, and the world is awaiting news of possible US strikes on Syria. As a result, it is hard to muster up the courage to keep chasing equities at present.

Oil prices seem happy to consolidate around recent highs, awaiting further developments in the Syria situation. Fundamental news is going to have to do all the heavy lifting if the price is to rally further however – the size and rapidity of the move from last summer’s lows means that positioning is now all on the long side, with little sign of fresh money flowing in to drive the price higher. Ahead of the open, we expect the Dow to start at 24,205, 16 points higher from yesterday’s close.

Sterling is flat against the dollar at $1.4173 following its recent rally, to $1.4223 on Wednesday, as traders wait for more data that should help shape expectations of a Bank of England interest rate hike next month.

Britain’s manufacturing and construction sectors posted surprise declines in February, pointing to an economic slowdown in the first quarter of this year. One of Britain’s leading forecasting bodies, the National Institute for Economic and Social Research, is predicting that GDP growth halved to 0.2% between January and March from 0.4% at the end of last year, while several City analysts are expecting an easing to 0.3% growth.

Key UK data on inflation and the labour market will be released next week.

European stock markets are broadly flat, as traders await more news on the conflict in Syria, and on the trade spat between the US and China.

• UK’s FTSE 100 down 0.06%
  
• Germany’s Dax down 0.06%
  
• France’s CAC down 0.06%
  
• Italy’s FTSE MiB up 0.27%
  
• Spain’s Ibex up 0.02%
  

Oil prices have eased slightly but remain high after Brent crude soared above $73 a barrel on Wednesday, the highest since late 2014. Brent is currently trading at $71.91 a barrel, while US crude is at $66.74 a barrel.

Fellow British retailer Dunelm which sells bedding and kitchen equipment, has fared better. The homewares chain reported 4.6% growth in like-for-like sales in the third quarter, driven by a 36% surge in online sales.

Its shares rose 8% on the news.

In corporate news, Carpetright, the struggling UK carpet retailer, said it would seek approval from creditors for a restructuring plan to close 92 of its stores, with the likely loss of 300 jobs, and reduce rent at 113. It has 434 shops and concessions across Britain.

The company also hopes to raise £60m from shareholders through a placing and open offer to reduce debts and fund its restructuring plan. It has issued a series of profit warnings in recent months, one of many highstreet retailers that are struggling as consumers are cautious about their spending.

Carpetright will seek creditor approval at a meeting on 26 April for the company voluntary arrangement which will allow it to close shops and lower rents, before asking shareholders for their support on 30 April.

The company’s shares plunged more than 16% in early trading.

Britain’s property surveyors have issued the most downbeat assessment of the housing market for five years.

The monthly survey from the Royal Institution of Chartered Surveyors (Rics) showed that in March demand from buyers fell for the 12th month in a row, new instructions from sellers declined for the seventh consecutive month, and prices were flat nationally.

Bank of England deputy governor Ben Broadbent has rejected the idea of a new super-committee charged with overseeing the economy and the financial system. He said merging the monetary and financial policy committees – as proposed by some politicians – would make decision-making too complicated and raise the risk of the kind of mistakes made before the financial crisis.

In the text of a speech he was due to give via video link to a conference at Australia’s central bank in Sydney, he argued for the separation of powers.

Apart from anything else the policymaking process would be far too complicated to hold any one bit of it to account and the all-powerful policymaker would naturally tend to focus on the more verifiable tasks.

A bit like the man who loses his keys in the park but looks for them under the streetlamp “because that’s where the light is” the attention of policy would be directed to the most observable objectives.

Perhaps we collectively fell foul of this trap, in some ways, ahead of the crisis.

The risk of a rare event is not an easy thing to judge and, having gone so long without a serious problem in the financial system, our attention was distracted by the more easily monitored task of stabilising the economic cycle.

And we’re off. Germany’s Dax, Spain’s Ibex and the FTSE 100 index in London are flat while France’s CAC has edged up 0.1%.

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

Oil prices soared to their highest levels since December 2014, above $73 a barrel last night. Brent crude futures are at $72.30, still the highest in more than three years.

Donald Trump declared on Wednesday that missiles “will be coming” in Syria, taunting Russia for supporting Syrian president Bashar al-Assad after a suspected chemical attack in Douma near the Syrian capital. Both Damascus and Moscow have denied any responsibility.

Trump’s comments raised the prospect of direct conflict between the two world powers backing opposing sides for the first time in the seven-year-old civil war.

Hidenori Suezawa, financial market analyst at SMBC Nikko Securities, told Reuters:

Last year Russia and Syria did not shoot back against US missiles. But this time the scale of possible attacks by the US and possibly its allies seems larger if Russia fires back, the war front will be bigger.

I don’t think we are heading into World War III but should there be a direct collision between the US and Russia for the first time, that’s the sort of headline that would plunge stock prices.

Michael Hewson, chief market analyst at CMC Markets UK, said oil prices are also under pressure from developments in Saudia Arabia and Yemen.

With nerves already frayed sentiment wasn’t helped by reports that Saudi Arabian defence systems had intercepted a number of missiles fired from Yemen, over the skies of Riyadh, which in turn saw oil prices hit their highest levels since December 2014 above $73.

UK prime minister Theresa May insisted that the chemical weapons attack on Douma “cannot go unchallenged”. She has not ruled out committing the UK to join a coordinated military intervention in Syria without consulting MPs.

The Russian rouble steadied on Wednesday after two days of heavy losses amid mounting concerns over the Syrian conflict and new US sanctions. It closed down around 62.59 to the dollar, still down more than 7% so far this week.

Stock futures are pointing to a flat or lower open in Europe. In Asia, Japan’s Nikkei edged down 0.2% while Hong Kong’s Hang Seng lost 0.7%. On Wall Street, stocks also closed lower. The S&P 500 slipped 0.55% while the Dow Jones lost 0.9%.

Minutes of the US Federal Reserve’s last meeting on 20-21 March released on Wednesday showed all of its policymakers thought the economy would improve further and that inflation would rise in coming months, suggesting a June rate hike remains on the table.

Agenda

7.30 BST Bank of England deputy governor Ben Broadbent speaking in Sydney

9.30 BST Bank of England credit conditions and bank liabilities surveys - Q1

Halifax regional regional house price index

20.00 BST BOE governor Mark Carney speaking at public policy forum in Toronto