Markets were struggling for direction for most of the day, with the exception of Wall Street which moved sharply lower on renewed worries about the US/China trade talks, a rising dollar and falling bond yields.

Several European markets suffered from a spate of profit taking, while the volatility of Brent crude - surging to new three and a half year highs, falling back then moving up once more - did little to help the FTSE 100. The closing scores showed:

• The FTSE 100 finished up just 12 points or 0.16% at 7722.98
• Germany’s Dax dipped 0.06% to 12,970.04
• France’s Cac closed up 0.23% at 5553.16
• Italy’s FTSE MIB edged up 0.31% to 24,297.17
• Spain’s Ibex ended down 0.49% at 10,207.6
• In Greece, the Athens market fell 2.04% to 799.37

On Wall Street the Dow Jones Industrial Average is currently down 210 points or 0.84%.

As for Brent crude, it is up 0.63% at $78.72 a barrel, having earlier touched $79.47.

On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.

Donald Trump’s surprise move to support Chinese group ZTE over the weekend prompted hopes of progress in trade talks between the US and China. But ahead of new meetings in Washington, US ambassador to China Terry Branstad has said the two sides were still “very far apart,” prompting an opening fall on US stock markets.

So despite the reasonable US retail sales figures, the Dow Jones Industrial Average is currently down 151 points or 0.59% while the S&P 500 opened 0.42% lower and the Nasdaq Composite down 0.67%.

US retail sales edged up in April with signs of wage growth and the recent tax cuts helping to offset some of the pressure on consumer spending from higher petrol prices.

Sales grew by 0.3% last month, in line with expectations, but the March figure was revised up to show a 0.8% surge compared to the initial estimate of a 0.6% rise.

Core retail sales, excluding cars, petrol, building materials and food services, climbed by 0.4% in April. Year on year, sales rose 4.7%.

Economist James Knightley at ING Bank said:

US retail sales have been heavily distorted over the past 6-9 month, but we are finally getting some “cleaner” data that suggests households are in good spirits and are spending in the new season.

US retail sales rose 0.3%MoM in April, which was in line with expectations, but there were some nice upward revisions to March’s data from 0.6% growth to 0.8% growth. Importantly, the “control” group, which excludes very volatile items such as food, autos, building materials and gasoline and supposedly better matches consumer spending within GDP, was up 0.4% after a 0.5% gain in March. February was revised up a tenth of a percentage point too.

Retail sales have been difficult to interpret for much of the past year. In particular, Hurricanes Harvey and Irma caused extensive damage that triggered a wave of spending as households replaced lost items in Sep-Nov 2017. In fact retail sales soared a cumulative 3.5% during the period only to fall back in Dec, Jan and Feb (although Feb has now been revised up to being flat).

Now that these distortions are out the way we expect upcoming data to show households continuing to spend strongly. Employment is rising, wages are growing and tax cuts means there is more cash in people’s pockets. With consumer confidence at strong levels, consumer spending growth is a key factor behind our above consensus 3% GDP growth forecast for the US this year. In turn, this leads us to look for a further three Federal Reserve rate rises in 2018.

Over in the financial markets, the oil price has hit a new three and a half-year high.

Brent crude is changing hands at $79.30 per barrel, the highest since late 2014.

Prices have been rising since America pulled out of the Iran nuclear deal last week - a move likely to take some Iranian oil production off the market.

Crude prices have jumped by 75% since June 2017, which has led to higher transport costs and petrol price at the pumps. That in turn pushed up inflation, and is one reason why real wages in the UK had been shrinking (although not any more)

Britain’s hospitals and social services could be hurt by the 28,000 decline in EU workers in Britain over the last 12 months.

So warns Dr Heather Rolfe of The National Institute Of Economic and Social Research.

She explains:

This represents a reduction in arrivals and increase in departures of EU citizens, which employers explain by uncertain futures and hostility. The reverse trend is shown by non-EU nationals in employment who increased in number by 20,000. This may be explained in part by employers making more use of the visa system when faced with skills shortages....

“These trends, in particular the fall in EU nationals working in the UK, are likely to affect the UK’s economic performance and also services, with the NHS and social care under particular pressure”.

According to FullFact, EU immigrants make up about 5% of English NHS staff, and 10% of all doctors.

The Resolution Foundation have sent over some useful charts, showing the state of the labour market:

Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, sums up the picture:

“Britain started 2018 as it has spent much of the last decade, with more impressive jobs growth but little prospect of recovering from its disastrous record on pay.

“Employment has hit a record high, driven by male employment breaking the 80 per cent barrier for the first time in nearly three decades.

“While the return to pay growth is very welcome it remains anemic and wages are still over £700 a year lower than they were a decade ago. The stark fall in productivity in recent months suggests that a strong pay recovery remain some way off.”

Britain’s finance minister has welcomed the news that wages are outpacing inflation.

Chancellor of the Exchequer, Philip Hammond said:

“Growth in real wages means that people are starting to feel the benefit of more money in their pockets; another turning point as we build a stronger, fairer economy.

“We can be proud of our record on jobs. The unemployment rate is at its lowest in over 40 years and with our National Living Wage we are making sure that the lowest-paid feel the benefit with an extra £2,000 a year.

“Now the focus has to be on ensuring that wages keep rising faster than inflation, so that living standards increase.”

I suspect that final sentence could be a coded warning about Brexit.

Hammond will attend a crunch meeting of the government’s Brexit sub committee this afternoon to discuss customs arrangements, where there’s no sign of agreement.

Theresa May’s ministers are split over two options -- a customs partnership, where the UK would collect tariffs on behalf of the EU, or a “max fac” model, which would use technology to police the border.

My colleague Andy Sparrow will be tracking all the action in his Politics Live blog:

Nearly two years after the Brexit vote, we can now see that the number of citizens from other European Union countries working in Britain has fallen.

The ONS reports that the total EU workforce in Britain fell by 28,000 over the last year.

That’s the first annual decrease since January to March 2010, when the UK has fallen into recession after the financial crisis.

Here’s the details from today’s labour market report:

• There were 28.73 million UK nationals working in the UK, 417,000 more than for a year earlier.
• There were 2.29 million EU nationals working in the UK, 28,000 fewer than for a year earlier.
• There were 1.25 million non-EU nationals working in the UK, 20,000 more than for a year earlier.
• The employment rate (the proportion of people aged from 16 to 64 years who were in work) was 81.9% for EU nationals, higher than that for UK nationals (75.6%) and higher than that for non-EU nationals (63.0%)

There was a sharp fall in the number of workers from Eastern European countries who joined the EU in 2004.

The Press Association’s Ian Jones has the details:

Disappointingly, UK productivity is falling again.

Productivity (broadly, how much we each produced) shrank by 0.5% in the first three months of 2018, the ONS says.

That’s because Britain’s growth rate slowed in the last quarter (to a measly 0.1%), even though companies created more jobs - meaning the amount of hours worked in the economy rose by 0.6%.

Ergo, we were less productive:

John Hawksworth, chief economist at PwC, says the UK economy is a mixed picture -- job creation remains strong, but productivity is a mess.

“The great British job-creating machine kicked back into life in the first quarter of 2018, taking the employment rate to a new record high. Unemployment edged down further and regular pay growth continued to edge up as the labour market has tightened. Real pay growth, excluding bonuses, is now firmly back into positive territory.

“All of this good news stands in marked contrast to the subdued GDP growth of just 0.1% estimated for the first quarter. This estimate could be revised up later but, taken at face value, it suggests that productivity growth turned significantly negative again after a couple of quarters when it seemed to be perking up.

Today’s jobs report also shows that Britain’s cost of living squeeze is easing.

Basic pay (excluding bonuses) rose by 2.9% in the first quarter of 2018, up from 2.8% a month ago.

That means that wages are rising faster than inflation (which fell to 2.5% in March).

So real basic pay (adjusted for inflation) is now growing at around 0.4%, after shrinking over recent months.

However, total pay (including bonuses) only grew by 2.6% during the quarter (again, down from 2.8%).

But before anyone celebrates, lets not forget that Britons are basically poorer than before the financial crisis.

The Office for National Statistics says:

• average regular pay (excluding bonuses) for employees in Great Britain was £460 per week before tax and other deductions from pay, £13 lower than the pre-downturn peak of £473 per week recorded for March 2008
• average total pay (including bonuses) for employees in Great Britain was £489 per week before tax and other deductions from pay, £33 lower than the pre-downturn peak of £522 per week recorded for February 2008

Newsflash: Britain’s jobless rate remained at 4.2% in the first three months of 2018.

The latest Labour Force statistics, just released, show that unemployment is at its joint lowest level since 1975.

The report also shows that the employment rate is at a record high (the data goes back to Ted Heath’s reign as prime minister):

The Office for National Statistics says:

• There were 32.34 million people in work, 197,000 more than for October to December 2017 and 396,000 more than for a year earlier.
• The employment rate (the proportion of people aged from 16 to 64 years who were in work) was 75.6%, higher than for a year earlier (74.8%) and the highest since comparable records began in 1971.
• There were 1.42 million unemployed people (people not in work but seeking and available to work), 46,000 fewer than for October to December 2017 and 116,000 fewer than for a year earlier.

More to follow!

The German Federal Ministry for Economics Affairs says the country’s economy remains strong, despite growth slowing in recent months.

In a statement, it says:

“Private consumption remains strong. Companies are upbeat on their trade prospects in the light of overall favourable conditions.”

The ministry also suggests that the drop in government spending may be due to the five-month hiatus of negotiations to form Angela Merkel’s new coalition.

Just: The Netherlands economy has slowed, but not as sharply as Germany.

Dutch GDP rose by 0.5% in the first three months of this year, down from 0.7% in October-December 2017.

At just 0.3%, this is Germany’s weakest quarterly growth since the third quarter of 2016.

ING economist Carsten Brzeski says Germany had a ‘stumbling start’ into 2018, for a variety of reasons:

Trade and government consumption were a drag on growth. Also, don’t forget that a couple of one-off factors like the cold winter weather, early Easter vacation and strikes probably distorted first quarter data.

Brzeski says we shouldn’t panic - he thinks that Germany’s economy still has underlying strength, including its manufacturing base:

Despite some minor leveling off, capacity utilisation is still close to record highs, assured production in the industry is close to all-time highs and the high stock of orders and historically low inventories all bode extremely well for industrial production in the coming months.

So this growth slowdown is “no more than a black eye”, Brzeski concludes.

The news that Germany’s growth rate halved in the last quarter is causing a stir.

Economist Ulrik Bie blames the drop in exports by German firms:

Tom Barfield of the AFP newswire says it will raise fears about the health of the European economy:

Pantheon Macroeconomics’ Claus Vistesen believes the eurozone will tick along at a more steady rate this year:

Oliver Rakau of Oxford Economics warns that Germany has lost momentum, and may struggle to bounce back in the coming months.

Newsflash: Germany has suffered a growth slowdown after being hit by weak trade.

The eurozone’s largest economy expanded by just 0.3% in the first three months of this year, official figures show.

That’s a sharp slowdown compared to Germany’s 0.6% in the final quarter of 2017. It is also below the 0.4% which economists had expected.

The Federal Statistics Office says:

The German economy continued to grow at the beginning of the year, though at a slower pace.

The slowdown was triggered by “less dynamic” foreign trade, as “both exports and imports decreased compared with the previous quarter”.

Government spending also fell, for the firs time in five years, dragging growth back.

But capital investment did rise during the quarter, suggesting companies are still investing in equipment and factories. Domestic consumption also made a positive contribution.

Although Germany is obviously still growing, these figures do indicate that the eurozone economy has lost some steam in recent months.

They also suggests that fears of a trade war, triggered by Donald Trump’s tariffs on steel and aluminium, are causing worrying ripples in the global economy.

Reaction to follow....

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

Today we get a new healthcheck on Europe’s economy, with a fresh estimate of eurozone GDP for the first three months of this year, plus growth figures from Germany and the Netherlands.

Last month’s ‘flash’ data showed the eurozone economy grew by 0.4% - investors will be concerned if this is revised downwards today.

Britain’s labour market is also in focus. The latest unemployment figures are expected to show the jobless rate remains at just 4.2%, its lowest level in over 40 years.

But will there be any progress on wages? Economists predict that basic pay growth rose to 2.9% in the first three months of this year - up from 2.8%.

A strong reading might give the pound a lift, and reignite speculation that interest rates might rise in August.

Jasper Lawler of London Capital Group says:

Given that inflation in March was 2.5%, wages growth of 2.9% or higher would be an encouraging sign that domestic inflation will slowly start to pick up, potentially reviving the possibility of a Bank of England rate rise later in the year and pushing sterling back towards $1.37.

Traders will also be tracking events in Italy, where talks to form a new government are still continuing.

The agenda:

• 7am BST: First estimate of German GDP in Q1 2018
  
• 8.30am BST: First estimate of Netherlands GDP in Q1 2018
  
• 9.30am BST: UK unemployment and wage growth figures for January-March 2018
  
• 10am BST: Updated estimate of eurozone GDP in Q1 2018
  
• 10am BST: ZEW survey