While the FTSE 100 has hit the day’s low, the German stock market has been boosted by comments from the White House that the trade talks in Shanghai were constructive. The remarks echoed those made by Beijing earlier today. The Dax in Frankfurt has bounced 0.5% on the news.

The bounce in sterling has pushed the export-heavy FTSE 100 index down 0.77% to 7587.71, down 58.6 points, because a higher pound is bad news for exporters.

As far as the European Central Bank is concerned, the outgoing president Mario Draghi is locking his successor into a “dangerous round of stimulus,” writes Hans-Werner Sinn, professor emeritus of economics and public finance at the University of Munich. Sinn serves on the German economy ministry’s advisory council.

Draghi will be succeeded by Christine Lagarde, the current chief of the International Monetary Fund, on 1 November.

With the eurozone data out of the way, markets are now looking ahead to the Fed rate decision later today. A quarter-point (25 basis-point) cut seems likely and there could be further reductions in months to come.

Michael Hewson, chief market analyst at CMC Markets UK, says:

There’s been a lot of speculation over the past few weeks over whether we’ll get to see the US Federal Reserve cut rates by 25bps or 50bps when they conclude their July meeting later today, when the real discussion ought to be about whether they should be even cutting rates at all...

At the end of last year, the real concern was that the Fed was tightening too quickly, in the face of growing storm clouds, however the central bank quickly realised that to do such a thing might well be a mistake.

Now it appears that the Fed is about to embark on a rate cut, which too all intents and purposes looks like an attempt to mollify a US President who has his own agenda, and who thinks the central bank is a tool for his own political ends.

Quite simply the current data in no way warrants a rate cut, whether it be 25bp or 50bp, with trend growth much higher than when the Fed started its hiking cycle and unemployment which is still near multi year lows.

Geoffrey Yu, head of UK investment office at UBS Wealth Management, said about the conclusion of the trade talks:

With expectations from this week’s trade talks at rock bottom, the fact that there has been no negative outcome will be viewed as marginally positive for markets. China’s declaration of intent on increasing its agricultural purchases from the US is a clear nod to President Trump’s tweet but does not change the fact that tariffs remain a sideshow to the key rivalry around technology. Markets will be now be primed for further signals from the next round of talks scheduled for September.

Growth in Italy was flat in the second quarter, slightly better than the contraction of 0.1% economists had pencilled in - but pointing to a stagnating economy.

The German GDP figures for the second quarter come out in a couple of weeks. Retail sales in June in the eurozone’s largest economy were surprisingly strong, rising by 3.5% from the previous month – the biggest increase since December 2006.

The German jobs market was resilient, separate data showed.

The Spanish economy grew by 0.5% in the second quarter, the slowest growth since mid-2014, according to figures out today. This compares with 0.2% in France and in the eurozone as a whole.

Nicola Nobile, lead eurozone economist at consultancy Oxford Economics, said:

• The eurozone data today confirm that the economy has moved down a gear as worsening external conditions and the increase in uncertainty continue to take their toll.
• While Spain continues to be the eurozone’s strongest performer, its GDP out-turn (+0.5%) for Q2 was still a negative surprise, marking the slowest growth in five years and suggesting that the resilience of the Spanish economy is gradually fading.
• Looking forward, the continued weakness in eurozone surveys suggest that a robust pick-up in GDP growth in H2 2019 is not on the cards.

For the European Central Bank, the question is not whether to stimulate the economy more, but by how much it will do so in September, said Bert Colijn, senior eurozone economist at ING.

Clearly, the economy is expanding at a slow cruising speed that seems too low for inflation to increase quickly towards the ECB target. And that gives the Bank more ammunition to act in the autumn.

While 0.2% is still a decent growth pace, concerns about the economy in the second half of the year are not decreasing, despite monetary stimulus being on its way.

Today’s inflation data should confirm the dovish view of a softening inflation outlook as core inflation was weaker than expected at 0.9%.

Nadia Gharbi, economist at Pictet Wealth Management, tweeted:

This chart from Eurostat shows how economic growth in the eurozone has weakened since last year. Yesterday, French data showed the eurozone’s second-biggest economy grew 0.2% between April and June, down from 0.3% in the first quarter.

Until now the French economy has held up better than some of its neighbours including Germany because it is less reliant on exports and less exposed to swings in the global economy.

Here is some instant reaction to the eurozone figures.

Chris Williamson, chief business economist at IHS Markit, tweeted:

European’s main stock markets are now mostly trading higher, ahead of the eurozone GDP data for the second quarter.

• Germany’s Dax up 0.25% at 12,177
• France’s CAC up 0.09% at 5,516
• Italy’s FTSE MiB up 0.4% at 21,362
• Spain’s Ibex down 0.1% at 8,976
• UK’s FTSE 100 down 0.3% at 7,621

On the FTSE 250, Aston Martin is the second-biggest faller, while the biggest loser is the shopping centre operator Intu, which owns the Trafford mall in Manchester. Its shares slumped more than 21% to 55.46p.

The company’s net rental income fell 7.7% on a like-for-like basis in the six months to June, and its half-year loss widened to £830m from £486m. Intu has been hit by a number of retailers going into administration or resorting to company voluntary agreements (CVAs), a type of insolvency procedure, to stay in business.

CVAs allow retailers to shut shops and negotiate rent reductions and have been used by household names such as House of Fraser and Debenhams. Others, including Toys R Us and electronics chain Maplin have collapsed into administration, and the last Maplin store closed in June.

Among all the gloomy UK corporate news this morning, Next has cheered traders. The clothing chain has bucked the downward trend on the high street and lifted its full-year sales and profit forecasts.

The shares are the biggest riser on the FTSE 100 this morning, up 8.4% at £60.89.

In Germany, unemployment rose less than expected in July.

Official figures showed the number of people out of work rose by 1,000 to 2.28m last month in seasonally adjusted terms, compared with expectations of an increase of 2,000. The unemployment rate stayed at 5%.

Daniel Terzenbach, a senior official at the Federal Labour Office, said:

Unemployment and underemployment increased in July, mainly due to the beginning of the summer break. The demand from companies for new employees is declining slightly and employment is continuing to increase, albeit less dynamically than recently.

However, Carsten Brzeski, chief German economist at ING, noted that in non-seasonally adjusted terms unemployment increased by 59,200 to 2.275m, the highest total since March. He said it was the worst July performance since 2015.

The industrial slowdown of the last 12 months is finally leaving its mark on the domestic economy and more particularly on the labour market. Employment expectations in the manufacturing industry have already fallen sharply since the end of 2017 and are currently at their lowest level since early 2010.

Aston Martin shares have lurched even lower after the carmaker posted a near-£80m loss, and are now down more than 20% at 451.6p.

Here is our story:

Investment in Britain’s car industry has ground to a halt amid fears over Brexit, with a “pitiful” £90m pledged for new developments in the first six months of this year, according to the industry body, our Brexit correspondent Lisa O’Caroll writes.

The Society of Motor Manufacturers & Traders has told Britain’s new prime minister Boris Johnson that a Brexit deal is essential to help the embattled industry to bounce back, or carmakers will need the same type of tax breaks farmers get to stay afloat.

Meanwhile Dignity, Britain’s biggest listed funeral services firm, has axed its dividend after its underlying pre-tax profits almost halved in the first six months of this year to £23.9m. The shares are down almost 10%.

It said it had been hit by a drop in the number of funerals it conducted and a shift towards cheaper, no-frills services.

Consumers are becoming more demanding and sophisticated. Values are changing, with increased secularism and a growing demand for personalised, lower-cost services, supported with online resources. There are fewer visits to the high street and more online research and shopping around.

Britain’s competition watchdog has been investigating the funerals sector, where prices are much higher than in the rest of Europe.

Shares in Taylor Wimpey, the housebuilder, fell 4% after a 9.4% slide in underlying pre-tax profits to £300m in the first half – despite a special 2020 dividend of 11p a share.

The FTSE 100, now down 0.24%, has also been dragged down by wealth manager St James’s Place and highstreet bank Lloyds Banking Group.

Lloyds, Britain’s biggest mortgage lender, said profits were hit by another £550m charge related to claims or mis-sold payment protection insurance. The bank posted a pre-tax profit of £2.9bn for the first half of the year, below City forecasts of £3.45bn, sending its shares 4.4% lower. Its chief executive António Horta-Osório said the deepening Brexit crisis had dragged down business confidence.

St James’s Place shares are down 5.6% after it also missed profit expectations due to weaker sentiment among the wealth manager’s clients.

In a flurry of corporate news, the luxury British carmaker Aston Martin has slumped to a half-year loss following a near-20% drop in European demand. The shares, which floated at £19 last October, fell 17% to a mere 473.2p this morning. James Bond’s favourite car marque has had a tough year since it debuted on the London Stock Exchange with much fanfare.

The Dax fell 2.18% yesterday with all sectors trading lower, with disappointing earnings from Lufthansa. We were expecting the German stock market to bounce back today but it’s flat at the moment.

Trade worries have resurfaced, after Donald Trump talked China down on Twitter yesterday – while US and Chinese officials kicked off a new round of trade talks in Shanghai.

European stock markets have disappointed at the open. Germany’s Dax and France’s CAC opened flat while markets in Spain, Italy and Portugal rose slightly. In London, the FTSE 100 index is down 0.15%, or 11.5 points, at 7634.82.

Consumers are propping up the UK’s economic performance but key sectors are showing signs of strain as Boris Johnson threatens to take the UK out of the EU without a deal, according to analysis by my economics colleague Richard Partington.

To gauge the impact of Brexit on a monthly basis, the Guardian monitors eight economic indicators, along with the value of the pound and the performance of the FTSE 100.