And finally, European defence stocks have closed in the red, pushed down by hopes of a breakthrough in the talks to end the Russia-Ukraine war.

In London, weapons maker BAE Systems ended the day among the big fallers on the FTSE 100 share index, down 3%, with defence contractor Babcock losing 1.5%.

German arms maker Rheinmetall has lost over 5%, while Renk lost 3.85%.

Stocks fell after the US and Ukraine said they had created an “updated and refined peace framework” to end the war with Russia

However, UK prime minister Keir Starmer said today there was more work to do to establish a “just and lasting peace” in Ukraine, but progress was being made.

Starmer said a group of countries supporting Ukraine, known as the coalition of the willing, would discuss the progress being during a virtual meeting on Tuesday.

He told broadcasters:

“Everybody is absolutely focused on what we need to get out of this, and that is a just and lasting peace.”

The US have restarted tariffs talks with the EU with a thinly veiled warning they will not drop Donald Trump’s punitive 50% tariffs on steel unless the EU rolls back on regulation on US tech giants.

Speaking after meeting EU trade ministers over lunch, commercial secretary Howard Lutnick told reports that the EU needed to come up with a “balanced approach”.

He flew into Brussels on his private jet for meetings with EU commissioner Maroš Šefčovič and the 27 EU trade ministers who want the steel and steel derivative tariffs eased along with 15% tariffs on wine and spirits that before Trump were rated at near zero and zero.

“If they can come up with that balanced approach, which I think they can, then we will together with them handle the steel and aluminium issues,” he told reporters.

While Šefčovič described an earlier breakfast meeting with Lutnick as “constructive” the read out from the US typically blunt.

“We are talking to them about” rolling back EU tech rules, Lutnick said in an interview with Bloomberg Television (as covered earlier). “In exchange for that, we will come up with a cool steel and aluminum deal.”

Lutnick and US trade representative Jamieson Greer are due to have meetings with business leaders this afternoon, followed by a working dinner with EU commissioners on the 13th floor of the EU headquarters tonight.

The Bank of Israel has cut interest rates for the first time in almost two years.

Israel’s central bank lowered borrowing costs by a quarter of one percent, and said inflation was moderating following the ceasefire in Gaza.

It said:

In view of geopolitical developments, economic activity in Israel recovered sharply during the third quarter. Annual inflation moderated and entered the target range.

During the reviewed period, the shekel appreciated and Israel’s risk premium continued to decline to slightly above its prewar level.

The move lowers Israel’s benchmark rate to 4.25% from 4.5%.

Announcing the decision, the Bank of Israel added:

• Annual inflation has moderated, and stood at 2.5 percent in the past two readings. Forecasters project that there will be some increase in inflation at the end of the year, and that it will then decline and stabilize around the midpoint of the target range.

• Economic activity recovered sharply in the third quarter. GDP expanded at a rate of 12.4 percent in annual terms, but its level remains lower than its long-term trend.

• The labor market remains tight. The ratio between the number of job vacancies and the number of unemployed remains high and the pace of wage increases continues to rise.

Metals recycling firm Unimetals has filed for compulsory liquidation, putting around 650 jobs at risk, PA Media reports.

The company, which operates 27 sites nationwide, is expected to begin winding down as soon as Tuesday after efforts to find a buyer for the business failed.

It follows several notices of intention to appoint administrators in recent weeks, with advisers from Alvarez & Marsal managing discussions with possible buyers, but they were unable to secure a sale.

A spokesperson for Unimetals said:

“We have worked tirelessly to explore every possible option to secure new financing for Unimetals Recycling (UK) Ltd, with the aim of meeting our financial obligations and safeguarding the future of the business.

“This included an accelerated M&A process, supported by our advisers and undertaken in full collaboration with stakeholders, to identify potential buyers or investors.

“Regretfully, despite substantial interest and attempts at completing a deal, no transaction was concluded.”

The spokesperson added:

“We recognise how distressing this news will be for everyone connected to Unimetals Recycling (UK) Ltd, particularly our employees who have worked tirelessly over the last year since we acquired it from Sims to try and turn this business around.”

The group said it was “working urgently to agree on a clear plan and timeline for what happens next”.

UK supermarket chain Asda has seen its credit rating cut deeper into junk territory today.

Ratings agency Fitch has downgraded Bellis Finco PLC, the parent company of ASDA Group, to ‘B’ from ‘B+’, with a negative outlook.

Fitch took the decision after concluding that Asda’s strategy of price cuts will hurt profits, and after analysing last week’s plan to sell off 24 stores and a distribution centre and lease them back.

Fitch says:

The downgrade reflects Fitch’s expectation that the pricing and availability strategy introduced to regain market share, combined with disruption from Project Future, will lead to a larger contraction in 2025 EBITDA [earnings] than initially estimated.

We also expect that the just announced £568 million sales and leaseback transaction, accompanied by increased capex, will increase leverage and could bring free cash flow (FCF) generation down towards neutral over 2026-2028. We now anticipate EBITDAR leverage will remain materially above 6x until 2028.

Meanwhile in the UK, the country’s biggest life insurers including Aviva, Legal & General, Scottish and Phoenix, could weather a “severe” market downturn, according to the Bank of England’s latest stress tests.

The tests put the life insurers’ balance sheet through a core scenario of “severe financial market stress” involving a drop in interest rates, tumbling stock prices and property values, and a jump in borrowing costs for companies that led. to credit downgrades and defaults.

New documents released on Monday broke down the aggregate results released by the Bank last week, and showed that the strongest performers were Rothesay, Pension Insurance Corp and Aviva’s subsidiary Aviva International Insurance.

M&G’s Prudential Assurance, Phoenix Group’s Phoenix Life arm, and Just Group’s Partnership Life Assurance Company, had the lowest capital positions after being put through the tests.

While this was the third-ever UK life insurer stress test, it is the first time firm-specific results have been published by the Bank.

However, the regulator explained this was “not a pass-fail exercise”, and unlike the Bank of England’s stress tests for high street lenders, this would not influence capital requirements or buffers for life insurers.

In the aggregate results published last week, the BoE’s Prudential Regulation Authority (PRA) said:

“The PRA continues to expect all firms to maintain robust risk management capabilities, including use of their own stress and scenario testing, to test their resilience to a range of downside scenarios and to inform their capital planning.”

Newsflash: Shares in Danish pharmaceuticals giant Novo Nordisk have tumbled around 10% after it reported that the latest trials of its Alzheimer’s treatment did not show a “statistically significant” reduction in progression of the disease.

In a disappointing development, Novo says that two trials of its semaglutide drug had failed to show that it slowed cognitive decline in Alzheimer’s patients.

Novo says that treatment with semaglutide did result in improvement of Alzheimer’s disease-related biomarkers in both trials, but this did not translate into a delay of disease progression.

Semaglutide is sold under the brand names Wegovy and Ozempic, as anti-obesity and diabetes drugs, so Alzheimer’s treatment would have been a new use for the drug. A previous study had suggested it could play a role here:

Martin Holst Lange, chief scientific officer and executive vice president of Research and Development at Novo Nordisk, says:

“Based on the significant unmet need in Alzheimer’s disease as well as a number of indicative data points, we felt we had a responsibility to explore semaglutide’s potential, despite a low likelihood of success. We are proud to have conducted two well-controlled phase 3 trials in Alzheimer’s disease that meet the highest standards of research and rigorous methodology,.

“We sincerely thank all participants and their caregivers for their meaningful contributions. While semaglutide did not demonstrate efficacy in slowing the progression of Alzheimer’s disease, the extensive body of evidence supporting semaglutide continues to provide benefits for individuals with type 2 diabetes, obesity, and related comorbidities.”

Over at London’s Queen Elizabeth II Centre, the head of the Confederation of British Industry is urging Rachel Reeves to prove that she is committed to growth in this week’s budget.

CBI CEO Rain Newton-Smith is telling the group’s annual meeting that the government must focus on growth, and avoid becoming locked in “a stop-start economy.”

Newton-Smith says many firms are concerned this year’s Budget will be a repeat of 2024, which included tax rises in businesses. And she is urging Rachel Reeves to show the “courage to take two tough decisions rather than twenty easier ones” when it comes to tax.

She says:

If growth is your priority, prove it – make hard choices for it. Against opposition, against short-term politics. Be it welfare, be it pensions increases – show the markets you mean business. All short-term politics leads to is long-term decline… and this country cannot afford another decade of stagnation.

“That means making hard choices for growth now – before they get harder. Having the courage to take two tough decisions rather than twenty easier ones. Raising the headroom to make promises stick. It means one or two broad tax rises, rather than death by a thousand taxes. Twenty bad choices don’t make a good system. It means stop being defined by the past – own the challenges of today.”

Reeves, though, is thought to have backed away from raising income tax rates, and is instead expected to announce a flurry of smaller tax rises to close a fiscal black hole and create more headroom for the government to hit its fiscal targets.

The CBI will also hear from Peter Kyle, Secretary of State for business and trade, and Kemi Badenoch, Leader of the Opposition, this morning.

Our Politics liveblog is covering all the action:

German business morale has unexpectedly fallen this month, as companies lose hope on a recovery of the German economy following two years of contraction.

The Ifo institute has reported that its business climate index fell to 88.1 in November from 88.4 in October, weaker than expected. It’s a blow to German chancellor Friedrich Merz’s efforts to revive growth through a major spending package.

Ifo president Clemens Fuest warns:

“Companies have little faith that a recovery is coming anytime soon.”

Carsten Brzeski, global head of macro at ING, says the survey paints a bleak picture of Germany’s economy as the end of the year approaches.

The problem, Brzeski explains, is that German policymakers still haven’t found a convincing answer to the structural challenges facing their economy:

Like U2 sang almost 40 years ago: the German economy still hasn’t found what it’s looking for.

The year 2025 has been another year of hope and disappointed optimism. A year which saw excitement and enthusiasm sparked by Germany’s unprecedented fiscal policy U-turn and its decision to invest significantly in infrastructure and defence this spring. But also a year that brought a rude awakening and a cringing feeling as we watched the new government undermine the positive impact of fiscal stimulus with clumsy budgetary decisions, new political tensions, and a lack of structural reforms.

The mood in Germany soured and optimism ground to a halt – and not just because of US tariffs or a stronger euro, both of which complicate matters for the export industry.

EU’s trade commissioner Maroš Šefčovič has said he has had “constructive” talks with US trade representative Jamieson Greer yesterday and US commerce secretary Howard Lutnick this morning.

But he said “more work lies ahead” to reduce tariffs “especially on steel and steel derivatives”.

He told reporters on the way into a summit of 27 trade ministers that they would also “discuss our relations with China” and a shared goal of “securing reliable supplies” in critical minerals”.

“We also recognise that more work lies ahead especially on steel and derivatives, where we seek both to reduce tariffs and to confront global capacity”.

Greer and Lutnick will meet all 27 trade ministers at lunch time today and will also hold talks with business leaders and two other commissioners, including Henna Virkunnen who is responsible for the tech sector and defence commissioner Andrius Kubilius.

Efforts to persuade Donald Trump to slash his punitive 50% tariff on steel and hundreds of products with an element of steel from knitting needles to wind turbines have to be seen in the context of the recent battle with China over chips, EU trade ministers have said.

They may also be impacted by the US’s widely criticised peace proposals for Ukraine with fears that the EU’s pushback on Trump’s plan could impinge on talks his trade team will hold in Brussels today.

EU trade ministers meeting in Brussels today hope to persuade US trade representative Jamieson Greer and commerce secretary Howard Lutnick that they should work together against China and reduce the punitive 50% tariffs on steel and form a united front “ringfencing” the US and bloc against cheap imports.

“We are in a very important moment in transatlantic relations,” Polish trade Michał Baranowski said.

“We are all watching very closely what is going on in Geneva and here it is clear that our economic and political relations have to go hand in hand,” he told reporters on the way into a summit of the EU’s 27 trade ministers.

Danish trade minister Morten Bødskov has said today’s meeting was about how they can “fulfill the implementation of the joint statement” setting out the tariff deal in late August “and stabilise trade relations between Europe and US”.

But he added:

“It is also a great opportunity to discuss the problems we have in common, the global trade system, China etc.”

European defence company stocks have dropped at the start of trading, and wholesale gas price are down too, after officials from Washington and Kyiv held weekend talks in Geneva over how to end the Ukraine-Russia war.

Last night, the US and Ukraine said they had created an “updated and refined peace framework” to end the war with Russia, after a row over an original US-backed document that included many of Moscow’s demands.

The US secretary of state, Marco Rubio, said he was “very optimistic” about the progress of the talks in Switzerland.

Rubio told reporters:

“I think we made a tremendous amount of progress.

We’ve really moved forward, so I feel very optimistic that we’re going to get there in a very reasonable period of time, very soon.”

Volodymyr Zelenskyy’s chief of staff, Andriy Yermak, also sounded positive, saying the sides had made “very good progress”, and were “moving forward to the just and lasting peace Ukrainian people deserve”.

Ukraine’s European allies published their own Kyiv-friendly plan on Sunday. It says negotiations over territory should take place after a ceasefire is agreed and should start from the line of contact – the existing frontline.

The war continued over the weekend, though, with a Russian drone strike on the major Ukrainian city of Kharkiv killing four people and wounding 17 on Sunday.

Hopes that the Geneva talks could lead to a breakthough to end the talks – leading to fewer weapons sales - knocked German defence firm Rheinmettal down by 3.5% at the start of trading.

Renk, which makes propulsion and drivetrain components for military vehicles, are down over 4%.

In London, defence contractor Babcock’s shares have dropped by 1.4%, while BAE Systems dipped 1% at the open.

Seperately, Bloomberg reports that European natural gas prices have hit an 18 month low today.

They say:

European natural gas dropped below €30 a megawatt-hour for the first time in more than a year amid discussions about a potential end to Russia’s war in Ukraine.

Benchmark futures hit the lowest levels since May 2024. They had been trading in a narrow band for weeks as traders weighed the region’s ample supplies against frequently shifting weather forecasts, assessing whether there’ll be enough gas to get through winter.

Shares in Anglo American have dropped by around 1% in early trading, as City investors react to BHP’s decision to initiate merger talks, and then walk away.

The situation doesn’t seem to disrupt Anglo’s existing plans to merge with Canadian rival Teck Resources.

But perhaps there was a lingering hope that the Teck deal might have flushed out a bidder.

As my colleague Nils Pratley wrote, astutely, in September:

The structure… looks like an open invitation to bigger rivals to bid for either Anglo and Teck, both of whom have seen off wannabe buyers in recent years.

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

A mega-merger deal in the mining sector has briefly burst back into life, before being dampened down.

Last night, news broke that mining group BHP had made a new takeover approach to Anglo American, over a year after its previous wooing was rejected. This fresh burst of enthusiasm threatened to disrupt Anglo’s plans to merge with Canadian rival Teck Resources, to create a £39bn global copper group, which has yet to be approved by shareholders.

BHP, it was reported, was proposing a deal based on a mix of cash and stock to Anglo.

But BHP’s new overtures appear to have been batted aside by Anglo, as it has now told shareholders:

“Following preliminary discussions with the board of Anglo American, BHP confirms that it is no longer considering a combination of the two companies.”

BHP insists that a deal would make sense, before then arguing that it can cope fine with Anglo, saying:

Whilst BHP continues to believe that a combination with Anglo American would have had strong strategic merits and created significant value for all stakeholders, BHP is confident in the highly compelling potential of its own organic growth strategy.

Under City rules, BHP is now blocked from bidding for Anglo for six months, unless there is a change in circumstances.

Back in 2024, BHP made three failed attempted to agree a merger with Anglo, before declaring in October that it had ‘moved on’.

Given last year’s rebuttal, and Anglo’s subsequent tie-up with Teck, BHP’s move is a little surprising.

As portfolio manager Andy Forster at Argo Investments in Sydney put it:

It’s a last throw of the dice for BHP.

I’m a bit surprised that, given the relative performance that they thought they’re in a position to come back and do another deal and extract value for shareholders.”

The agenda

• All day: CBI annual conference

• 9am GMT: IFO survey of German business confidence