10pm: US debt deadline extended

US Treasury Secretary Janet Yellen has extended the deadline for raising the federal debt limit to 5 June.

Ms Yellen had previously said the Treasury could run out of money as early as 1 June.

“Based on the most recent available data, we now estimate that Treasury will have insufficient resources to satisfy the government’s obligations if Congress has not raised or suspended the debt limit by June 5,” she said in a note to congressional leaders.

The extension buys White House and congressional negotiators more time to strike a deal to raise the statutory ceiling on the nation’s borrowing capacity.

5pm: Market closes higher

The FTSE 100 has entered the Bank Holiday weekend in positive territory, rising 56.33 points (0.74%) to close at 7,627.20.

The commodities-heavy index was lifted by mining stocks tracking higher metal prices on the back of US-China talks.

Investors remain hopeful that a debt ceiling agreement will reached before 1 June.

Global markets

Germany has entered a recession, according to revised figures from the Federal Statistical Office showed Europe’s largest economy contracted by 0.3% in the first quarter of 2023.

This followed a 0.5% fall in the previous three months.

While private sector investment and construction grew at the start of the year, this was offset in part by a drop-off in consumer spending as higher prices forced households to rein in spending.

Households have faced considerably higher heating costs, despite government subsidies, which has seen German consumers hold back on spending on other things.

Interest rate rises by the European Central Bank have so far had little influence on reducing inflation, which stands at 7% across the eurozone.

In the US, where talks on the debt ceiling are heading towards next week’s deadline, some traders starting to avoid government debt that comes due in June and others asre preparing to deal with securities at risk of default.

President Joe Biden and congressional Republican Kevin McCarthy are said to be closing in on a deal that would raise the government’s $31.4 trillion debt ceiling for two years while capping spend