The main US markets have opened and all three have hit new record highs:

• S&P 500 +0.41% at 3,109 points
• Nasdaq +0.53% at 8,524 points
• Dow +0.36% at 27,881 points

DATA ALERT: US industrial output contracted -0.8% in October.

That’s a larger contraction than was forecasted by analysts, who were expecting a -0.4% drop. It is also worse than September’s -0.3% fall.

NEWSFLASH: Engineering firm Babcock have been awarded the contract to build to the next fleet of warships for the UK defence ministry.

It will be working on a fleet of five ships for the Royal Navy at its Rosyth facility, at an average cost of £250m each.

Babcock was named the preferred bidder back in September.

Analysts from investment bank Jefferies say BT could launch a legal challenge if Labour attempts to nationalise part of the business.

The note, written by Jerry Dellis, Ulrich Rathe and Martin Hammerschmidt, explains:

In a nationalisation scenario, we understand that BT’s most effective legal recourse might be to defend shareholder value, not attempt to block government policy.

The UK has bilateral investment treaties with countries in which overseas BT shareholders are located, and these are intended to protect against asset expropriation.

UK-based shareholders might expect to receive equal treatment.

NEWSFLASH: US retail sales rose +0.3% in October.

That is higher than consensus forecasts for a +0.2% rise and an improvement on the -0.3% fall in September.

Excluding car sales, the numbers were slightly disappointing, up just +0.2% compared to expectations for a +0.4% increase. But it’s still better than September when retail sales contracted by -0.1%.

My colleagues Mark Sweney and Patrick Collinson have put together a comprehensive Q&A on the feasibility of the Labour broadband policy, covering key issues including whether the policy would breach state aid rules:

Could the policy fall foul of policies on state aid?

The EU has strict rules against state aid – or government subsidies that benefit one EU company at the expense of others – but according to some commentators, there are no regulations against businesses becoming entirely state-owned.

How easy would it be to nationalise BT?

Labour’s plans do not involve nationalising all of BT, just Openreach, which operates the UK’s broadband network, and other parts that relate to broadband provision, such as the retail arm BT Consumer.

Openreach was set up as a subsidiary of BT in 2006 but two years ago was legally separated from its parent company by the telecoms regulator, Ofcom, to counter complaints from rivals that its lack of independence was limiting competition in the market. That separation would make the nationalisation of Openreach much simpler but taking the business into state ownership would be a daunting proposition.

Openreach employs about 32,000 staff – almost a third of BT’s global workforce – and has a turnover of about £5bn.

It is responsible for the rollout of full fibre across the UK, which at an estimated cost of £35bn is the biggest infrastructure project after the HS2 rail project.

Is BT’s pension deficit an issue?

Ofcom, the communications industry regulator, examined the possibility of breaking up BT in 2016 and cited BT’s £4.5bn pension deficit as one of the reasons why it would not be a good idea. Steve Unger, Ofcom’s director of strategy, said at the time a full-blown separation would trigger “very significant costs” related to the deficit.

You can read the full piece here:

BT’s share price has been shifting all morning, but its stock is no longer the worst performer on the FTSE 100.

Its shares fell as much as 3% in early trading, hitting lows of about 189p but have slightly recovered.

The telecom giant’s shares are now down 1.7% and hovering around 191p per share.

A Lloyds Banking Group spokesperson has said:

The group welcomes the Court’s decision. Throughout this process, the group has sought to act in the interests of our shareholders as a whole.

To refresh your memories, Lloyds announced the takeover of HBOS on 18 September 2008.

Claimants said they suffered substantial financial losses as a result of the deal, Their lawyers claimed Lloyds had been bullied into the takeover by Gordon Brown’s government, which hoped to save struggling HBOS

The government eventually took a 43% stake in the enlarged Lloyds Banking Group but no longer owns any shares after selling its final tranche in May 2017.

While the big tech giants will be taxed to help fund the broadband scheme, McDonnell says the cash will actually be funding the infrastructure that their businesses run on:

Yes, tech giants like Google and Facebook will have to pay a bit more for internet connectivity that they all benefit from.

Labour’s John McDonnell, the shadow chancellor, is back on the telly, giving the next speech at the party’s event in Lancaster.

He said the broadband plan would benefit businesses which are both using and developing 5G technologies.

Let’s be clear, it’s not a return to the 1970s ... This is public ownership of the future.

If you prefer to take a listen, ITV have some clips from Corbyn’s speech:

My colleague Rajeev Syal has rounded up key comments from shadow chancellor John McDonnell’s media tour this morning.

Labour’s view on the benefits:

It doesn’t just have economic benefits. It has environmental benefits in terms of basically people locating in their local towns and not commuting, some people moving into rural and coastal areas as well so they’re properly connected, and it has social implications as well.

On whether staff would be paid at the same rate as BT:

We will always ensure that we attract the talent that we need.

On Labour’s intention to tax big technology companies to fund the policy, McDonnell said:

We’re not being unfair to anyone, we’re simply saying you make your profits here, on the percentage of the profits you make here, you pay your taxes properly.

On rival companies:

McDonnell said he hoped to come to an agreement with rival broadband companies such as Sky and TalkTalk over ensuring access, and if necessary they could “come within the ambit of British Broadband”.

We’ll come to an agreement with them, either an agreement of access arrangements or working alongside us, or, yes, if necessary they can then come within the ambit of British Broadband itself.

Amidst the flurry of reaction and commentary to Labour’s BT pledge, we’ve had the final reading of eurozone inflation released this morning.

The 19-country bloc’s headline inflation slowed to 0.7% year-on-year in October, from 0.8% in September. That’s line with preliminary estimates by Eurostat.

The drop was caused by a fall in energy prices, which offset higher prices for services, food, alcohol and tobacco.

Labour plans to fund the nationalisation by swapping investor shares for UK government bonds.

So who are the lucky shareholders in the running for those gilts?

Here’s a quick look at the top 10 shareholders in BT:

• Deutsche Telekom 12.1%
• BlackRock 5.73%
• Vanguard 2.73%
• Orange 2.69%
• Columbia Threadneedle Investments 2.38%
• Legal & General Investment Management 1.81%
• Norges Bank Investment Management 1.68%
• Invesco Asset Management 1.63%
• M&G Investment Management 1.33%
• Schroder Investment Management 1%

Labour has said web companies like Amazon, Facebook and Google, would foot the bill for the nationalised British broadband company’s annual maintenance costs.

The party estimates those operating costs are about £230m a year.

McDonnell told Sky News:

These companies now have to pay their fair share...no more sweetheart deals.

My colleague Rowena Mason has further details here:

Investors are considering which other UK firms could be candidates for nationalisation.

Some of the names being bandied around include Royal Mail (privatised fully by 2015) and Royal Bank of Scotland (which is still 62% owned by the government following its bailout in 2008).

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

BT expressed surprise at last night’s announcement having been assured by Labour fairly recently that they weren’t being considered as a nationalisation candidate.

With other companies also being told the same thing by the Labour Party, investors will no doubt be looking very carefully at other possible candidates for nationalisation, and whether they need to be concerned.

Companies like Royal Bank of Scotland, National Grid, Centrica, Severn Trent, Royal Mail as well as the rail company franchisees, like Go Ahead Group and National Express to name but a few, are already trading at a nationalisation discount.

For now, given Labour’s current polling numbers the concern is fairly minimal, and investors will be hoping it stays that way, which helps explain the fairly muted share price reaction.

More comments from Labour’s shadow chancellor, who is now speaking to Sky News.

He says the Labour pledge to establish a company called British Broadband from nationalising BT’s Openreach, follows similar models in countries like South Korea.

John McDonnell confirms that the nationalisation will be done by swapping investors’ BT shares for UK government bonds.

He adds that parliament will determine the value and ensure it is “done with a proper price” and that government bonds will offer shareholders a“stable, long-term investment.”

That’s exactly what pension funds and other shareholders are saying they need at the moment. It will be a good deal.

We can’t afford not to do it...we’ve fallen behind global competitors.

He adds:

I’ve been touring around the country and you know even in some of our city areas they’re not connected up...this is good for the economy.

The reaction trickling out from analysts hasn’t been glowing so far.

There are concerns that ongoing efforts by the government and sector regulator Ofcom to incentivise fibre installation by rival operators could all be for naught.

Matthew Howett, Founder & Principal Analyst at Assembly comments:

This is a spectacularly bad take by the Labour Party. The almost cut throat competition between broadband rivals has meant faster speeds, improved coverage and lower prices for consumers up and down the country.

The current government, and independent regulator Ofcom, have spent the last three years incentivising alternative operators to BT to deploy faster fibre technologies. Companies such as Virgin, CityFibre and others have committed billions to rival Openreach. Those plans risk being shelved overnight.

Only one other country in the world to come close to going down this route, and for a good reason – it’s hard, expensive and fraught with difficulty. Australia’s NBN is years late, massively over budget and offering speeds and technology a fraction of the original political intention.