UK economy faces recession if strait of Hormuz remains closed, EY warns - as it happened

Britain’s biggest drugmaker, AstraZeneca , is understood to be in discussions to take over its US rival Bristol Myers Squibb in a deal that would create a near-$400bn (£300bn) pharmaceutical group.

AstraZeneca, run by Pascal Soriot, its longtime chief executive, is the second-biggest listed company in the UK, with a market value of nearly £196bn before the news broke. BMS, headquartered in Princeton, New Jersey, and known for its cancer treatments, is worth $133bn.

A tie-up would be one of the biggest-ever pharmaceutical deals and create the world’s fourth-largest drugmaker by market value. The talks were first reported by the Financial Times .

Crude oil prices fell sharply while stocks and government bonds rallied on Monday after Donald Trump cancelled planned strikes on Iran and claimed peace talks were about to resume.

Brent crude was trading 5% lower at $83.47 a barrel by lunchtime, after falling as much as 7.3% to $81.55 a barrel. US West Texas Intermediate dropped more than 5% to $79.47 a barrel.

Both global oil benchmarks jumped more than 20% in July after fighting between the US and Iran resumed, and as attacks on several tankers in the strait of Hormuz revived fears for the safety of vessels transiting the important shipping passage.

UK manufacturers ramped up production last month for the fourth consecutive month and at the fastest pace in almost two years, according to a leading survey of the industry.

The S&P Global poll of manufacturers found them in upbeat mood in July, though anxious about the prospect of a long war in the Middle East that would block supplies of oil and gas, and raise the cost of production.

Uncertainty about the outcome of the war meant the S&P Global purchasing managers’ index (PMI) dipped in July, but maintained a run of nine months of expansion. The PMI, which tracks activity in the sector, fell back to 51.9 in July, down from 52.5 in June, despite the rise in manufacturing output growth. A reading above 50 denotes a period of expansion.

The yen has hit its highest level in three months after Japan and the US launched a combined operation to support the Japanese currency.

The yen strengthened to ¥155 to the US dollar on Monday, its highest level since early May, after Tokyo and Washington confirmed they had carried out a rare joint currency intervention late last week.

Tokyo’s finance ministry said on Monday the two governments had conducted coordinated yen-buying intervention and would not hesitate to take further action.

The intervention came after the yen had weakened to a 40-year low of almost ¥164 to the dollar last week.

Donald Trump told reporters on Sunday: “They have a weakening yen, and they wanted a little bit of help. And we’re always there for Japan .”