With Spanish shares recovering despite the continuing tensions between the government and Catalan separatists, European markets managed to end the day higher. The exception was Germany, which slipped back from its record highs. In the UK, a weakening pound gave some support to the FTSE 100, dominated as it is by overseas earners who benefit from a fall in sterling. The final scores showed:

• The FTSE 100 finished 40.41 points or 0.54% higher at 7507.99
• Germany’s Dax dipped 0.02% to 12,968.05
• France’s Cac closed up 0.3% to 5379.21
• Italy’s FTSE MIB rose 0.49% to 22,566.03
• Spain’s Ibex ended up 2.51% at 10,214.7
• In Greece, the Athens market slipped 0.79% at 744.80

On Wall Street, the Dow Jones Industrial Average is currently up 91 points or 0.4%, ahead of Friday’s non-farm payroll numbers.

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

Still with the US, and factory goods orders rose by more than expected in August.

New orders increased by 1.2%, following a 3.3% drop recorded in July and better than the forecast 1% rise. On the recent hurricanes the Commerce department said: “We cannot isolate the effects of Hurricanes Harvey and Irma on either the Advance Report or Full Report on Manufacturers’ Shipments, Inventories and Orders, because the survey is designed to estimate the month‐to‐month change in manufacturing activity at the national level and not at specific geographic areas.”

US markets are continuing their winning streak.

The Dow Jones Industrial Average is up 12 points in early trading while the S&P 500 and Nasday Composite have opened at new record highs.

The pound continues to fall, now down a cent or 0.8% against the dollar at $1.3135.

The UK currency is now at its lowest since early September and has lost all the gains (and more) that it made after the Bank of England suggested rates might rise in November.

Worries about a challenge to Theresa May as UK prime minister following her conference speech has unsettled investors, since a weakened leadership is hardly ideal for the crucial Brexit negotiations.

The latest poor economic data - in the shape of disappointing car sales - also point to an economy which would struggle to accommodate increased borrowing costs. Indeed, ratings agency S&P suggested that very thing this week.

Meanwhile the strong US data - service sector on Wednesday, jobless claims now - is helping to push the dollar higher.

Over in the US, and weekly jobless claims have come in better than expected.

Ahead of the non-farm payrolls numbers tomorrow, the Labor Department said the number of Americans filing for unemployment benefits fell by 12,000 last week to 260,000. Analysts had been expecting a figure of around 265,000. But the impact of the recent hurricanes makes the picture a little difficult to assess. The department said: “Hurricanes Harvey, Irma, and Maria impacted this week’s claims.”

Dennis de Jong, managing director of UFX.com, said:

President Trump will be quick to point towards the strength of the labour market on the back of today’s positive jobless claims data. The initial impact of hurricanes Harvey, Irma and Maria have typically increased the number of new applications for unemployment benefits. However, today’s dip dampens fears of job growth restraint in the coming months.

Initial jobless claims are unlikely to return to August’s record lows for a while yet, though. Weekly claims had previously been operating at their lowest level since the early 1970s, but with many businesses yet to reopen in the wake of the natural disasters, a number of Americans are still faced with little choice but to seek unemployment benefits.

The decline in car sales highlights the pressure on chancellor Philip Hammond to deliver an impressive budget next month.

The government desperately needs something to cheer about, following the debacle of Theresa May’s speech yesterday. Hammond could improve the mood with some growth-friendly policies, tax cuts or spending pledges.

Abolishing the public sector pay cap, for example, might give the Tories a boost.

But there’s a problem. Britain’s economy has only expanded slowly this year, so Hammond has less wriggle-room than previously expected. Weak GDP growth means the UK’s official fiscal watchdog may revise down its assessment of the UK economy.

That would wipe out much of the £26bn which the chancellor set aside for a rainy day in 2016’s autumn statement.

Chris Giles, economics editor of the Financial Times, reckons that two-thirds of Hammond’s war chest has been wiped out. He writes:

Philip Hammond is facing what officials describe as “a bloodbath” in the public finances in his Budget next month as weak economic forecasts derail the government’s plans.

As much as two-thirds of the £26bn of headroom in the public finances that the chancellor created last year as a buffer for the economy through the Brexit period is likely to be wiped out after the government’s fiscal watchdog concludes its forecasts for growth have been too optimistic.

The Office for Budget Responsibility will publish on Tuesday a new analysis suggesting it has persistently over-estimated Britain’s productivity over the past seven years and will give a broad hint that it will rectify the situation with a more pessimistic Budget forecast.

Slower growth in the forecast will limit deficit reduction and cut the size of the war chest that Mr Hammond put aside to smooth the Brexit transition. This leaves him in an awkward position politically, since he is under increasing pressure to end the austerity cap on public pay, lower the burden of debt on students and build houses.

More here.

Labour MP Chuka Umunna says the decline in UK car sales shows that Britain’s exit from the EU is causing significant harm to the UK ecnoomy.

“This is yet more evidence that Brexit is having a serious and damaging impact on our economy and on the livelihoods of the British people. Higher inflation, lower growth and greater uncertainty are all taking their toll. These new figures suggest that households are feeling the pinch.

“Car sales tend to be a barometer for the overall health of our economy, which makes this news even more concerning.

“The Government has a duty to put our economy and living standards first in the Brexit negotiations. That is why they should end their ideological red lines, give people and businesses certainty, and abandon their plan to leave the Single Market and the Customs Union.”

Ian Gilmartin of Barclays Corporate Banking says the 9.3% slump in car sales in September was a poor result, but not unexpected given the drop in consumer confidence.

New plate months are always crucial, and some were pinning their hopes on the usual biannual boost providing a bit of respite ahead of further tough times, but that hasn’t materialised.

The result isn’t a surprise because across a number of retail sectors consumers are understandably becoming more reluctant to commit to high value purchases. Add to that the ongoing confusion over diesel models, which posted a 22% drop last month, and it’s easy to see why the overall figures have dipped so much.

Sue Robinson, director of the National Franchised Dealers Association (NFDA), says worries over diesel’s future are partly to blame.

“Consumers walking into the showroom need more clarity on issues such as diesel and air quality. We are working closely with car retailers to assist them in educating their customers.”

Andy Bruce of Reuters points out that motor retailers have warned that business conditions have deteriorated:

Diesel car sales slumped by over 20% in September, as British drivers continue to shun them following recent emission scandals.

Around 170,000 new diesel cars were registered last month, down from almost 218,000 in September 2016.

That follows the revelation that Volkswagen had used ‘cheat software’ to make their cars seem less polluting.

The SMMT claims that this trend is “thwarting the ambitions of both industry and government to meet challenging CO2 targets”.

That’s because diesel cars emit less greenhouse gases than petrol models. However, they also emit toxic nitrogen oxides, which cause tens of thousands of deaths each year

A crackdown on older, more polluting diesel cars is now underway - London is introducing a new emissions charge to deter them entering the capital.

The value of used diesel cars has fallen sharply in recent months, as consumers worry that some cities could ban them altogether....

BREAKING: Car sales across the UK fell by 9.3% in September.

That’s the sixth monthly decline in a row, and raises the real risk that British car registrations post their first annual decline since 2011.

The Society of Motor Manufacturers and Traders blames a fall in consumer confidence, due to “economic and political uncertainty” and confusion over the government’s air quality plans

As this charts shows, it’s the first decline in September sales in six years.

Mike Hawes, SMMT Chief Executive, said,

September is always a barometer of the health of the UK new car market so this decline will cause considerable concern. Business and political uncertainty is reducing buyer confidence, with consumers and businesses more likely to delay big ticket purchases.

The confusion surrounding air quality plans has not helped, but consumers should be reassured that all the new diesel and petrol models on the market will not face any bans or additional charges. Manufacturers’ scrappage schemes are proving popular and such schemes are to be encouraged given fleet renewal is the best way to address environmental issues in our towns and cities.

More to follow....

Sterling has hit a three-week low against the US dollar, shedding half a cent to just $1.318.

Fresh speculation over Theresa May’s future, ongoing Brexit worries, and today’s weak car sales are all weighing on the pound.

Alberto Gallo, head of macro strategies at Algebris Investment, blame the prime minister’s nightmare speech yesterday:

Connor Campbell of SpreadEx says there is plenty of bad news chipping away at the pound.

There were the lingering effects of Standard & Poor’s comment yesterday stating that it is ‘sceptical’ of a Bank of England rate hike.

Keeping with the BoE, deputy governor Sam Woods argued that a transition deal with the EU would need to be in place before Christmas to prevent an exodus of City jobs out of the UK.

Then there was the report that car sales may have fallen 10% in September, leaving the UK industry on track for its first annual decline since 2011.

Britons are cutting back on new sofas, as well as new cars, it seems.

Furniture maker DFS just posted a 22% drop in pretax profits over the last year, and warned that trading conditions are tough.

Ian Filby, DFS’s chief executive, told the City this morning:

The UK furniture market continues to be very challenging and the outlook for the sector remains uncertain.

DFS appears to be another victim of weakening consumer confidence, and rising inflation which has pushed up import costs and driven down real wages.

Laith Khalaf, senior analyst at Hargreaves Lansdown, explains:

Big ticket items like sofas tend to be the first things consumers cut back on when they are feeling the pinch, and a slew of poor sales data from the car industry corroborates that trend.

Things don’t look like they are getting much easier either, with DFS expecting weak trading conditions to continue into the next financial year.

SMMT chief Mike Hawes also warns that car manufacturers are putting off new investment until they know what’s happening with Brexit.

Hawes says Britain’s auto industry enjoyed a “tremendous run” of investment, around £2.5bn per year for the last five years.

But.... investment fell by a third in 2016, and is “down markedly again this year, Hawes says.

He blames uncertainty over Britain’s exit from the European Union:

“People are waiting to see what the future relationship with our biggest market, Europe, is going to be before making any additional investment.”

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

Britain’s car industry is facing its first drop in annual sales since 2011, after suffering a sharp drop in demand last month.

Figures due out at 9am today will show that new car registrations fell for the sixth month running in September.

September is usually a bumper month for the industry because licence plates change (meaning motorists can proudly drive away with a ‘brand new car’ to impress the neighbours).

But not this year. Industry experts warn that sales may have fallen by nearly 10% year-on-year in September.

That means there’s now a serious danger that British car sales will shrink in 2017, for the first time since 2011.

Mike Hawes, the head of the Society of Motor Manufacturers and Traders, says we should brace for a bad set of figures.

Speaking on that BBC Today Programme, Hawes warns:

Sales have been falling for six months and that trend is probably going to be magnified given the size of the September market.

So we’re probably going to see something over 9% in September.

Hawes blames falling consumer morale, saying:

The confidence that people have in making big-ticket items… is just declining.

He also cites uncertainty over the figure of the car industry itself. Recent warnings from the government that petrol and diesel car sales could be banned by 2040 have left consumers confused.

We’ll bring you the full picture of the UK car industry at 9am today.

Also coming up today...

The Catalan crisis continues to loom over the European financial markets, with speculation that the region could vote on declaring independence next week.

We’ll also be watching the energy sector, following the government’s move to introduce a price cap on bills.

It’s not as simple as that, though, as my colleague Adam Vaughan explains:

Theresa May’s pledge to cap “rip-off” energy prices is about as clear as the average electricity and gas bill.

The prime minister promised to introduce a draft bill next week to give the energy regulator, Ofgem, powers to cap the bills of people being “punished” for their loyalty and their inability to shop around.

But the Conservatives later admitted that they were only giving Ofgem the powers to impose a cap for everyone on a standard variable tariff, not actually ordering the regulator to impose it.....

Here’s the agenda:

• 9am BST: UK car registration figures released by SMMT
  
• 10am BST: Eurozone retail PMI reports
  
• 1.30pm BST: US weekly jobless figures
  
• 3pm BST: US factory orders for August