Stocks on FTSE 100 drop as German political deadlock impacts market, despite rise in BP and Deliveroo due to M&A.

Footwear sales, reduced in-store sales, out-of-stock levels, and lost Food sales. UBS said this could lead to £15-60 million of one-off costs. It cut its price target on M&S to 145p from 195p.

3.15pm: Furlough scheme to be axed at the end of October

Chancellor Rishi Sunak said the furlough scheme for workers sidelined by the Covid-19 pandemic will come to an end at the end of October, as part of a gradual unwinding of state support for the economy as restrictions are lifted.

The scheme has so far cost the government £43bn, helping millions of workers hold onto their jobs. Sunak said later this summer there will be more flexibility introduced to the scheme to allow workers to return part-time, which 9 million have already done voluntarily.

He also said he was “putting the nation on a sounder footing” and that the UK faces “a severe impact and potentially high-levels of unemployment”.

1.50pm: UK reaches post-Brexit trade deal with India

The UK has reached a post-Brexit free trade agreement with India that will lower tariffs on UK whisky and cars, as well as create new opportunities in the service sector and cut costs for UK companies in the pharmaceuticals and fintech industries.

The director-general of the CBI, Tony Danker, described the agreement as a “hugely positive step”, while India’s powerful Tata group called it a “big boost” to UK-India ties. The deal is expected to boost UK GDP by £1 billion in the first year alone.

12.15pm: BP surges on reports of Shell takeover bid

BP PLC (LSE:BP.) is leading the blue-chip risers after a report in the Sunday Times revealed that its rival Shell is considering a takeover bid, driving BP’s shares up by 5.5% to 336.7p.

The two companies have worked together on refining and chemicals plants, leading to speculation that a deal could be on the cards. AB Foods PLC (LSE:ABF) is also making headlines after it was reported that the company is in talks to sell its Kingsmill bread business to private equity firm PAI Partners in a deal worth £75 million.

11.00am: Deliveroo accepts bid from DoorDash

Deliveroo Holdings PLC (LSE:ROO, NASDAQ:DASH) has accepted a bid from US rival DoorDash Inc (NYSE:DASH) in a deal worth £5.2 billion. The offer, which values Deliveroo at 660p, has been accepted by the Deliveroo board and is expected to be completed in the coming weeks.

The deal will see Deliveroo continue to operate under its own brand, while also benefitting from DoorDash’s global network and technological capabilities. The move is seen as a strategic step for DoorDash to expand its reach in the UK market.

9.00am: FTSE opens lower

The FTSE 100 opened lower on Thursday morning, with sentiment weighed down by concerns over rising inflation and bond yields. The blue-chip index fell 49 points, or 0.6%, to 8,551 in early trading.

Reports of a surge in inflation in the US have raised fears that central banks may have to tighten monetary policy sooner than expected, leading to a sell-off in global markets. The FTSE was dragged lower by weakness in energy and consumer stocks, with oil major Royal Dutch Shell PLC (LSE:RDSA) among the biggest fallers.