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However the BoE's quarterly forecasts last week did show that previous market expectations of an interest rate rise in the second quarter of 2015 was consistent with the central bank's aim to keep inflation at its 2 percent target.

13.03 Back with the movers in the stock market, a downgrade by HSBC analysts has knocked shares in Indian mining group Vedanta Resources down 6.6pc, the worst-performer in the FTSE 250. Cutting its recommendation to 'underweight', the broker said cash flow at the company was 'more constrained than the market anticipates'.

But Petrofac, the oil field services group, has gained 1.9pc on news the FTSE 100 company has won a $1.2bn contract from BP. Well-received results from French peer Technip have also helped the British group's shares higher.

UK factory orders rebound

12. 59 UK Factory orders staged a modest rebound in February as expectations for output in the next three months hit their highest level since September.

The Confederation of British Industry's monthly industrial trends order book balance rose to +3 in February from -2 in January - well above the long-run average of -17, although slightly short of the +5 expected by economists.

The CBI said 16 out of 17 manufacturing sectors in the survey expect output to increase over the next three months.

Howard Archer, chief UK and European economist at IHS Global Insight said the survey shows UK manufacturing is performing well.

The February CBI Industrial Trends survey indicates overall that the manufacturing sector is performing pretty well in the first quarter of 2013, but has come modestly off the peak levels seen in late-2013. There are no references in the CBI survey to manufacturing activity being affected by the flooding.

Moving forward, manufacturers will be hoping that ongoing generally good news on the UK economy fuels improved business confidence which in turn translates into improved business investment and higher demand for capital goods.

Meanwhile, improving global growth should help UK manufacturers' export orders as 2014 progresses, although the upside for export orders may well be constrained by only gradually improving domestic demand in the eurozone. Furthermore, UK manufacturers may be hampered by sterling's strength', he said.

Ireland still close to deflation

12.34 Ireland's annual inflation rate remained close to deflationary levels in January as prices rose at the same pace compared with December, according to official data.

'Prices on average, as measured by the CPI (consumer price index) were 0.2pc higher in January compared with January 2013,' the Central Statistics Office said in a statement.

This was the same level as the 0.2pc annual rate that was recorded in December 2013.

India Swaps Fall to Two-Week Low on RBI Plan to Inject More Cash

12.00 India's one-year interest-rate swaps fell to a two-week low after the central bank said it will pump more cash into markets to offset quarterly corporate tax outflows due next month.

The Reserve Bank of India will inject money via additional repurchase auctions in March, it said in a statement after the close of trading on Tuesday and local markets did not react yesterday as they were shut for a holiday.

Is the China manufacturing really that bad?

11.43 Kathleen Brooks, research director at FOREX.com, doesn't think China's manufacturing figures are that worrying.

Chinese economic data, on the whole, has actually been surprising to the upside in recent weeks, for example the pick-up in trade and exports data and stronger loan growth for December. This is reflected in Citigroup's economic surprise index, which is in positive territory and at its highest level since October.

The Chinese New Year, which fell at the end of January, is often used as an extended break and some factories may have shut down at the beginning of Feb. Thus, some Chinese manufacturers may have squeezed work into January, which could account for the weakness in the Feb survey.

The PMI data miss is not necessarily the harbinger of doom it at first seems. Overall, Chinese data has been trending higher in recent weeks, which could be good news for overall market sentiment.

The February data may not be that reliable due to the Lunar New Year holiday, so the recent weakness in market sentiment may only be short-term.

The link between EM and weak China data seems to be breaking down; instead developed markets seem more effected by the PMI miss this month', she writes.

^{By FOREX.com and Bloomberg}

Bernie Ecclestone wins High Court lawsuit case with German media company

11.03 A High Court judge has dismissed a $140 million damages claim against Bernie Ecclestone and three other defendants from German media company Constantin Medien.

Ecclestone and three other parties were accused of making a 'corrupt bargain' with a German banker, Gerhard Gribkowsky, to undervalue BayernLB's stake in the sport when it was sold to present owners CVC Capital Partners eight years ago.

UK productivity gap with G7 largest since 1992

10.42 UK productivity is worse than previously thought, with the productivity gap with other G7 economies the widest since 1992.

Output per hour in the UK was 21pc below the average for the rest of the major G7 industrialised economies in 2012. On an output per worker basis, UK productivity was 25pc below the average for the rest of the G7 in 2012.

In 2012, UK output per hour was 3pc below its level in the pre-recession year of 2007, and 16pc points below the counterfactual level had productivity grown at its average rate before the recession. This compares with a productivity gap in 2012 of around 5pc for the rest of the G7.

Dr John Philpott, director of The Jobs Economist, said the figures show UK productivity is 'even direr than first thought'.

We know UK labour productivity has been dire since the start of the recession. We now know our relative performance is even direr than first thought. Output per hour worked in 2012 was 25pc below the average for the G7 major industrialised countries - the widest 'productivity gap' for two decades. Moreover, even though the UK economy has recovered since 2012 there is no evidence to suggest that the productivity gap is likely to have narrowed, leaving the UK still staring up the international productivity league table.

'The UK economy clearly needs in particular a strong resurgence of business investment in order to both start closing the productivity gap and to trigger a rise in real wages for people in work', he said.

Iraq's oil exports dip by 4.8pc

10.35 Iraq's Oil Ministry says crude exports have averaged 2.229 million barrels a day in January, a decrease of nearly 4.8pc from the previous month.

December's oil exports averaged 2.341 million barrels a day, bringing that month's revenues to $7.470 billion, based on an average price of $102.893 per barrel.

Iraq's oil minister blamed bad weather and sabotage attacks by militants for the dip in exports.

Iraq holds the world's fourth largest oil reserves, some 143.1 billion barrels. Oil revenues make up nearly 95pc of Iraq's budget.

France deflation alert?

10.20 French January CPI and HICP fell to -0.6pc month-on-month, down from 0.4pc in December. BNP Paribas believes the figures shwo France is dangerously close to deflation.

The decline is a little stronger than our forecast and the consensus, and particularly impressive given the numerous tax hikes which occurred in January.

As we had expected, food and tobacco weights remained roughly unchanged, manufactured goods weighting was diminished, whilst that of energy (electricity and natural gas to be precise) and services increased (except for telecommunications).

This pattern change should have increased the inflation; the fact it did not happen tells a lot about the disinflationary forces at work within the French economy. Indeed, underlying inflation (which excludes volatile items and taxes) collapsed from 0.6pc to just 0.1pc. France is now getting very close to deflation!', writes Dominique Barbet, head of market economics at BNP Paribas.

German wages fall

09.54 German real wages dropped 0.2pc year-on-year, according to German statistical office figures released today.

The drop in real wages can partly be explained by one-off factors as extra payments in 2013 were lower than in 2013. Corrected for these extra payments, real wages would have been up by a meagre 0.2% YoY. Even such an increase would be disappointing. Over the last six years, German real wages have on average increased by an annual 0.5%. Too little to create a consumption boom but also too much to facilitate Eurozone rebalancing',said Carsten Brzeski, economist at ING.

Baca Juga

City briefing

09.30 The morning briefing from Louise Armistead rounds up some of the major corporate news this morning.

The energy row has been reignited as Centrica, the owner of British Gas, has reported a sharp drop in profits - and fired another attack on political interference. At a group level Centrica's pre-tax profits fell to £1.7bn from £2.4bn last year. There was a £133m loss from its gas-fired power stations in the UK and profits in North America were also hit. But the real the real heat surrounds British Gas which saw household profits plunge 6pc to £571m in 2013, despite hiking bills by an average of 9.2pc in November.

Britain's biggest defence company, BAE Systems, has announced a slump in final pre-tax profits from £1.2bn to £422m.

Everything Everywhere, the communications group that owns EE, Orange and T-Mobile, has said it is bringing back 1,000 call centre jobs to the UK', she writes.

BAE biggest FTSE drag

09.23 Back in the stock market, defence giant BAE Systems is the heaviest FTSE 100 faller, sliding 9.1pc after the group said that American budget cuts would see earnings-per-share fall by as much as 10pc in 2014.

Bank of America CEO gets 17pc payrise to $14m

09.16 Brian Moynihan, chief executive of the Bank of America, has been given a major payrise with about $12.5m in stock grants.

Mr Moynihan made $1.5m as a base salary and didn't receive a cash bonus. Last year, Mr Moynihan received $12m.

When Mr Moynihan took over in 2010, the bank had bad loans and an array of legal issues, but profits at the bank are now growing.

Eurozone manufacturing unexpectedly falls to two-month low

09.04 Eurozone PMI fell to 52.7, below expectations of 53.1 as manufacutring growth slows to a two-month low.

But the PMI has now help above 50 for eight months, signalling continuous expansion of business activity since last July.

Eurozone services PMI reached a five-month high of 51.7, according to Markit data.

A dip in the eurozone PMI provides a reminder that the region's recovery continues to be uneven and fragile. The slight easing in growth is disappointing, but it's too early to read too much into one month's data, especially as the rate of growth of new orders picked up to its highest since mid-2011. Looking at the latest two months as a whole, the PMI suggests the region is on course to see GDP expand by up to 0.5pc in the first quarter, which would be the strongest growth for three years.

'Growth continued to be led by Germany, which contrasts with a worrying renewed downturn in France, where malaise in the domestic economy is offsetting better export performance and suggests there is a risk of the French economy contracting again in the first quarter. Germany, on the other hand, is likely to see GDP increase by as much as 0.7pc. The 'periphery' is meanwhile enjoying its best period of growth since early-2011, which should help drive a more broad-based and sustainable expansion as we move through 2014.

'Unemployment looks set to remain a worry, as companies report ongoing pressure to keep headcounts down to reduce costs and boost competitiveness. Prices also continue to fall, albeit at the slowest rate for almost two years, as companies could often only generate sales via discounting', saidChris Williamson, Chief Economist at Markit.

FTSE follows European stocks down

08.50 The FTSE 100, like markets across Europe, has followed Asian stocks lower and is down 43 points to 6,753, a 0.6pc decline. Weak factory activity data from China has hit investor sentiment, while disappointing French services sector figures are also dragging the market lower.

German services PMI expands

08.30 Stronger-than-expected growth among service providers drove a faster expansion in Germany's private sector in February, Markit's preliminary composite Purchasing Managers' Index (PMI) shows.

The survey, which covers more than two-thirds of the economy, rose to 56.1 in February, up from January's 55.5 and suggests Europe's largest economy gaining momentum and continues to drive a regional recovery.

'Germany is positively surging,' said Chris Williamson at Markit. 'The PMI is consistent with growth of 0.7 percent in the first quarter and we could see that exceeded if the rate of expansion continues to accelerate further.'

However, Lena Komileva, managing director of G Plus Economics, has told Bloomberg TV that is still wary about the state of the EU economy.

French manufacturing PMI falls to 2-month low

08.15 Manufacturing activity in France contracted faster than expected in January, with PMI falling to 48.5 in February, down from last month's 49.3 reading.

Analysts had expected the index to rise to 49.6 this month, and the disappointing drop has added to concerns over France's economy.

A reading above 50.0 on the index indicates industry expansion, below indicates contraction.

The preliminary services purchasing managers' index fell to a seasonally adjusted 46.9 in February from 48.9 in January and below expectations for an increase to 49.4.

French private sector firms reported a slightly sharper decline in output during February, largely reflecting weakness on the services side. However, the data did reveal some positive developments, namely a return to growth of manufacturing production and another marginal rise in new export orders. Moreover, service providers' confidence rose to a 23-month high, with a number of panellists indicating that they had been innovating on new products which are now close to market, resulting in a more bullish outlook for the sector', saidJack Kennedy, senior economist at Markit.

Markit PMI also pointed to falling price charges. Prices charged by French private sector companies continued to fall in February, with a number of panellists mentioning strong competitive pressures.

UK economic recovery 'not secure'

08.09 Chancellor George Osborne will warn today that Britain's economic recovery is not secure because it is too dependent on consumers spending money.

Businesses are 'not investing enough' and 'not exporting enough' and the nation risks becoming too reliant on the City of London, the Chancellor will say - see our full story here .

Today's business front page

07.49 Here's the front page of today's Business section of The Daily Telegraph.

Twitter's reaction to WhatsApp deal

07.37 Twitter is struggling to understand Facebook's $19bn purchase of WhatsApp.

And here's an inspirational #throwbackthursday for anyone who's been rejected from a job.

China manufacturing hits seven-month low

07.15 A key index of Chinese manufacturing fell further in February to its lowest level in seven months, in a sign of diminishing strength in the world's second-largest economy.

HSBC's preliminary reading for its purchasing managers' index (PMI) for China, which tracks manufacturing activity in factories and workshops, fell to 48.3 this month.

That marked a further tumble from the final reading of 49.5 in January, when the figure showed contraction for the first time in six months.

The Nikkei is down 2.15pc to 14449.18 and the Hang Seng is down 1.19pc to 22392.58 following the release of China's PMI.