Markets rally ahead of UK service sector report – business live

European stock markets have risen at the start of trading, helped by the fall in the pound and the euro against the US dollar overnight.

In London, the FTSE 100 has gained 0.5%, while Germany’s DAX rose 0.2% to a fresh all-time high

Ireland has got Service Sector PMI day off to a good start.

Growth in Ireland’s service sector hit a 10-month high in April, according to Investec’s monthly report.

Companies reported a rise in new business, as clients grew more optimistic about economic prospects. This encouraged them to take on more staff to deal with a jump in new orders.

This sent the Irish Service PMI rocketing up to 61.1 in April, up from 59.1 in March – the highest reading since last June.

Philip O’Sullivan, chief economist at Investec Ireland, says the report “paints a bright picture” for Ireland’s economy, with service sector bosses “strongly optimistic” about the next 12 months.

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

There’s a more optimistic mood in the City this morning, after America’s central bank gave an upbeat assessment of the US economy last night.

After leaving interest rates on hold, the Federal Reserve predicted that the recent slowdown in US growth was “likely to be transitory”, pointing to encouraging employment statistics and rising business investment.

Marc Ostwald of ADM Investor Services says the statement was…

…carefully crafted to acknowledge what the FOMC suggested were ‘transitory’ weaknesses in personal consumption and core inflation, while placing particular emphasis on the pick-up in business investment and the strength of the labour market.

Fed watchers reckon we should expect a US interest rate rise in June….

That’s pushed up the dollar against the pound and the euro, which means European stock markets are tipped to rise this morning:

Investors are now looking to a flurry of service sector reports this morning, from data firm Markit.

They may confirm that Europe’s recovery is strengthening, with Germany, Italy, France and Spain’s services PMI all expected to rise. Those figures come between 8.15am and 9am BST.

RBC Capital Markets say:

For both Spain and Italy, we expect the services reading to improve on March. That, coupled with Tuesday’s higher manufacturing PMI would leave the composite PMI higher in both, consistent with the picture for the wider euro area that the improved Q1 sentiment has been sustained into Q2.

The UK service sector PMI (at 9.30am) is tipped to drop to 54.6, from 55 in March — that would mean a small slowdown in growth. However, the manufacturing and construction PMIs have already beaten expectations, so perhaps services might surprise us as well.

We’re also getting new UK car registration figures at 9am BST, and eurozone retail sales figures at 10am.

There’s also masses of UK corporate news to watch, with HSBC, Societe Generale, Next, Morrisons, Royal Dutch Shell, Rolls-Royce and Randgold all reporting results.