After a shaky start it looked like markets would fail to build on Monday’s strong gains. But shares moved into positive territory by the close as Wall Street edged higher and polls indicated the Remain camp was slightly ahead. But investors were still uneasy ahead of Thursday’s vote. The final scores showed:

• The FTSE 100 finished up 0.36% or 22.55 points at 6226.55
• Germany’s Dax rose 0.54% to 10,015.54
• France’s Cac closed 0.61% better at 4367.24
• Italy’s FTSE MIB added 0.45% to 17,431.17
• Spain’s Ibex ended up 0.23% at 8667.3
• In Greece, the Athens market was 3.71% better at 608.29

On Wall Street the Dow Jones Industrial Average is now 29 points or 0.16% higher.

Sterling hit a five and a half month high before falling back, trading down 0.12% at $1.4659.

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

Federal Reserve chair Janet Yellen has again warned of the risk of the UK voting to leave the European Union. In her testimony to Congress she said:

In the current environment of sluggish growth, low inflation, and already very accommodative monetary policy in many advanced economies, investor perceptions of and appetite for risk can change abruptly. One development that could shift investor sentiment is the upcoming referendum in the United Kingdom. A U.K. vote to exit the European Union could have significant economic repercussions.

She also expressed concerns about the domestic US market and the outlook for China:

The latest readings on the labor market and the weak pace of investment illustrate one downside risk--that domestic demand might falter. In addition, although I am optimistic about the longer-run prospects for the U.S. economy, we cannot rule out the possibility expressed by some prominent economists that the slow productivity growth seen in rece

Although concerns about slowing growth in China and falling commodity prices appear to have eased from earlier this year, China continues to face considerable challenges as it rebalances its economy toward domestic demand and consumption and away from export-led growth.

So that means the Fed is “closely monitoring global economic and financial developments” and taking a cautious approach to raising interest rates:

The FOMC continues to anticipate that economic conditions will improve further and that the economy will evolve in a manner that will warrant only gradual increases in the federal funds rate. In addition, the Committee expects that the federal funds rate is likely to remain, for some time, below the levels that are expected to prevail in the longer run because headwinds--which include restraint on U.S. economic activity from economic and financial developments abroad, subdued household formation, and meager productivity growth--mean that the interest rate needed to keep the economy operating near its potential is low by historical standards.

Ahead of the latest testimony from US Federal Reserve chair Janet Yellen, Wall Street has opened in positive territory.

The Dow Jones Industrial Average is up 26 points or 0.14% while the S&P 500 opened up 0.13% and Nasdaq 0.25%.

Mario Draghi, head of the European Central Bank, has told the European Parliament that he is ready to take action if Britain votes to leave the EU.

Draghi singled out the risks posed by Thursday’s vote, while testifying to MEPs on the Economic and Monetary Affairs committee.

He says that the recovery of the euro area economy “gained momentum at the start of the year”, but added:

At the same time, uncertainty remains high and downside risks are still significant due to the continued fragile state of the global economy and geopolitical developments.

We will closely monitor the evolution of the outlook for price stability. We stand ready to act by using all the instruments available within our mandate, if necessary, to achieve our objective. In particular, the ECB is ready for all contingencies following the UK’s EU referendum.

Draghi also reminded MEPs that further stimulus is coming soon, and urged them to help deepen the single market and reform their economies.

Here’s the full statement:

The session is being streamed live here.

The pound has dropped back after David Cameron made a solemn plea to the country to vote Remain.

Speaking (unexpectedly) outside Number 10, the PM said the economy will be stronger if we stay, and weaker if we leave. He also cited national security, warning that it will be harder to keep the country safe outside the EU.

At one point, Cameron declared that “Brits don’t quit”; and that the EU will carry on making vital decisions without the UK after a leave vote.

And he also made a direct appeal to older voters, saying Thursday’s vote was vital for their children, grandchildren and future generations.

It’s not clear if this was a scheduled move by the PM, or an off-the-cuff decision.

But the pound has now lost its early gains, and is hovering around $1.4688, where it started the day.

The FTSE 100 is down 8 points too.

But traders are also reacting to the latest Survation poll, which showed Remain just one percentage point ahead of Leave.

Our Politics Liveblog will have full reaction and analysis to Cameron’s speech.

Larry Summers, the former US Treasury secretary, has joined the ranks of international experts warning against Brexit.

In a new blog post, Summers predicted wild market gyrations on Friday if the Leave campaign in, and long-term economic damage.

Here’s a flavour:

First, unlike almost all other economic policy choices, Brexit is irreversible. François Mitterrand’s lurch toward socialism in France, Ronald Reagan’s excessive tax cuts in the U.S., and Japan’s encouragement of bubbles were all egregious errors, but all were reversed, albeit not before substantial damage had been done. Divorce can be reversed by remarriage if regretted. There is no reversing Brexit if it proves unwise. Indeed, given the E.U.’s very strong incentive to discourage further dissolution, it is far from clear that there would even be concerted efforts to minimize its cost.

Second, markets are likely to suffer extraordinary volatility in the wake of Brexit. A Black Friday could follow referendum Thursday. It is likely that foreign investors in British stocks would lose 15 percent off the bat, adding together market declines and currency losses. This is a judgement supported by the gyrations in markets induced by relatively small fluctuations in the perceived chance of Brexit and by the very high prices commanded by out of the money options. The truth is that even with all the regulatory changes that have been put in place, we do not know for sure how the financial system will respond. A return of systemic risk as large losses lead to cascading liquidations cannot be ruled out. At a time when central banks have far less ammunition than they did in 2008, the consequences could be grave.

Third, Brexit will undermine confidence and increase uncertainty. No one knows what the new structure will be or how soon it will emerge. Quite likely Brexit would lead to changes not only in Britain’s relationship with Europe but also within Europe itself. While businesses wait to see what happens, they will hold off on new investment. Some will decide that it is much safer to base European operations outside the U.K.

Boom! The pound has hit its highest level since the start of the year, in a fresh signal that Brexit fears are easing.

Sterling has jumped by almost 0.5% against the US dollar to $1.4781, a level last seen on 4 January - before the whole dratted EU referendum campaign began.

The pound is also up around 0.2% against the euro at €1.3017, its highest level in June.

The rally comes as the Bank of England reveals that UK financial institutions took just £370m in a special liquidity auction today.

That auction was set up to flood the City with liquidity, if needed, by allowing banks to get ready cash off the BoE in return for handing over assets [here’s an explainer]

£370m is the smallest take-up for any such auction since January 2015.

Such a small take-up suggests that banks are not worried about panic gripping the financial world on Friday morning, when the referendum result is known. Alternatively, they may feel they have enough liquid assets to sell if needed.

Those disappointing UK public finance figures mean Britain’s actually borrowed £200m more this year than in 2015-16.

Ross Campbell, public sector director at accountancy group ICAEW, blames the EU referendum for creating uncertainty - and distracting chancellor George Osborne.

“The impending EU referendum vote has contributed to an uncertainty that has resulted in a sluggish UK economy, therefore it was imperative that the Chancellor put public sector finances at the top of his priority list for May 2016. An increase of £0.2 billion in public sector net borrowing in the current financial year-to-date, when compared with the same period in 2015, illustrates that he has done quite the opposite and has taken his eye off the economic ball.”

“Whatever the result on Friday morning, whether we remain in or leave the European Union, it is vital that Government devises a comprehensive and rigorous strategy to kick-start a faltering economic recovery.

Here come the latest UK public finances.....

... and they show that Britain borrowed £9.14bn in May, to cover the gap between tax receipts and government spending.

May is never a good month for the public finances, and this is actually the smallest deficit for a May since 2007 (which tells you something about how bad the situation has been since).

But it’s more than expected, and it pushes up the total national debt to £1.6069 trillion, or 83.7% of GDP.

And in another blow, April’s borrowing figures have also been revised higher, to £8.2bn from an initial forecast of £7.2bn.

It’s too early to say whether the UK is on track for its deficit targets this financial year (which runs from April 2016 to March 2017):

Newsflash from Germany:

The German constitutional court has rejected attempts to block the European Central Bank’s bond-buying rescue plan, the Outright Monetary Transactions scheme.

That is important, because OMT is a key part of the rescue plan for the eurozone.

It allows the ECB to buy unlimited quantities of eurozone government bonds, if they suffer a spike in borrowing costs. This would, in theory, avoid a repeat of the 2011-2012 eurozone debt crisis, when countries such as Greece, Portugal and Ireland were locked out of the markets.

Although it’s never been used, OMT’s very existence helped to calm the crisis in the eurozone (as speculators were reluctant to risk being crushed by the ECB).

Campaigners had asked Germany’s constitutional court to block it, claiming it violated rules banning central banks from funding national governments.

Back in 2014, the German judges referred the issue to the European Court of Justice, which approved OMT with some minor caveats.

That decision has now been rubber-stamped, which will reassure the markets..

Some City experts are concerned that investors may be too complacent about Thursday’s referendum.

Joe Rundle, head of trading at ETX Capital, warns that the markets could be overreacting to a few polls putting Remain in the lead.

Investors are rolling the dice on Britain choosing to remain part of the EU but there is still plenty of opportunity to get burned. The polls are close and there is still every chance of a Brexit, despite the swing towards the In camp over the last few days.

Traders betting the farm on a sterling rally happening on Friday should remember just how wrong polls were at the last General Election and just how far the pound could drop if Britain votes out.

While the polls are close, the odds paint a different picture. We’ve lengthened the odds of a Leave vote on our Brexit market, with a roughly 75% probability that Remain will triumph.

But it’s far from over – there is still huge uncertainty for the markets and the City over the coming days as support for the Leave is holding up and could rally further.

Duncan Weldon, head of research at the Resolution Foundation, agrees:

This chart underlines how strongly the markets reacted yesterday – with shares rallying around the globe.

Sterling has touched a new seven-week high this morning, extending yesterday’s recovery.

The pound hit $1.4740 against the US dollar, it’s best level since the start of May. Yesterday it surged by around three cents, in its strongest rally in almost eight years.

London’s stock market is falling in early trading, as traders get another dose of Brexit jitters.

The FTSE 100 index had shed 40 points in the first few minutes, a drop of 0.6%, to 6165 points.

That’s not a reason to panic - given the Footsie surged by 180-odd points on Monday. But it does show that investors are still anxious about Thursday’s vote – in the light of these fresh warnings from Nouriel Roubini and George Soros.

Mining companies are leading the fallers, showing concerns about global economic growth.

UK housebuilders such as Berkeley, Barratt and Persimmon are also dropping back. They would probably suffer from Brexit, if it meant higher interest rates and fewer EU workers looking for property.

Nouriel Roubini, one of the world’s most famously pessimistic economists, has urged the UK not to quit the EU.

Roubini won the nickname “Dr Doom” for his dark predictions in the run-up to the financial crisis, and was proved right when the 2007 credit crunch struck, leading to the collapse of Lehman Brothers in 2008.

And in a flurry of tweets, he predicted that Britain could plunge into recession if it decided to leave the EU - especially given its record trade deficit, and government borrowing needs.

Sky News’s Faisal Islam reckons this gives Roubini extra credibility, compared to the more ‘establishment’ voices such as the IMF and the OECD.

Roubini is certainly not a dusty old economist. Back in 2013, he was ordered to remove a hot tub from the roof of his New York penthouse. Roubini told one reporter he would cram up to 10 young models into the tub, adding (immodestly) that:

They love my beautiful mind. I am ugly, but they’re attracted to the brains. I’m a rock star among geeks, wonks and nerds.

Apparently the hot tub returned to action in 2015 - with Roubini hosting “special meditation sessions” — plus a dip in the tub — during New York Fashion Week. It’s unclear whether last night’s Brexit tweets were sent from the tub......

The warning comes hours after George Soros, the veteran financial speculator-turned-philanthropist, predicted that the pound would plunge if Britain voted for Brexit.