The Trump administration is considering extending a ban on laptops in aircraft cabins to all flights to the US from anywhere in the world, in a move that would create major disruption for passengers and airlines.

US homeland security officials who met European commissioners in Brussels this week said that if Washington does extend its ban on large electronic devices, Europe would not be singled out and restrictions would apply to all flights to the US.

Brussels was also assured that it would be given ample warning of any extension of the ban in order to alert member states and European airlines. EU and US officials will meet again in Washington next week to discuss the technical practicalities of extending the ban.

David Lapan, a spokesperson for homeland security, said that secretary John Kelly was considering a worldwide extension of the US ban, though no decision had yet been taken.

When you are making porridge, you cannot make it thicker in one corner. It is the same with flight security

“We are considering extending the restriction that is in place in the Middle East and north Africa now, and the expansion of those restrictions could include Europe and other locations,” said Mr Lapan. “We’ve had ongoing discussions with our European colleagues but it is still something that Secretary Kelly is considering.”

The decision has reduced any anger in Brussels that Europe would be singled out by any ban and that the US was failing to fully communicate the details of its plans. “In the army, when you have a kettle and you are making porridge, you cannot make it thicker in one corner of the kettle,” said one senior EU diplomat. “It is the same with flight security. Why should [EU-US] flights be restricted and more secure than the ones to Thailand or Egypt?” 

Under the proposed restrictions, passengers would be forbidden from carrying electronic items larger than a mobile phone into an aircraft cabin as hand luggage. The ban is already in force at nine Middle Eastern airlines which fly to the US. 

The restrictions come in response to fears that Isis is developing a bomb that can be hidden within a laptop and detonated on board.

Airlines fear the impact of any laptop restrictions. The chief executive of the International Air Transport Association, the airline lobby group, has estimated that extending the ban to Europe alone would cost passengers $1bn through longer travel times and lost productivity.

The ban also threatens to hit demand for flights to the US, with many companies forbidding employees from stowing laptops in the hold because of the risk of sensitive information being stolen.

One European airline official said the impact of an extended ban would be huge. “It will definitely cause cancellations — especially in the first few weeks as people adapt to the new rules. It also might impact on travel patterns — people might not fly so much and instead opt for a video call,” the official said.

Emirates, the largest Gulf carrier, last week reported an 82 per cent fall in annual profits, which it blamed in part on the laptop ban and a resulting reduction in its flights to the US. In April, the airline announced it was cutting the number of US-bound flights because of weak demand following introduction of the measure. 

A ban would also force airlines to amend rules that prohibit lithium ion batteries from being stowed in hold luggage. Brussels is concerned by the danger posed by overheating batteries left in the hold. Flight safety experts have found that when packed tightly together, laptop batteries can self-ignite and burn. Overheating batteries can also give off fumes and explode on board. 

The meeting between US and EU officials on Wednesday came after Brussels wrote to the Trump administration to complain of a lack of information regarding the proposed extension of the ban.

European officials were frustrated after reports emerged that US president Donald Trump had shared sensitive information on the matter with Russian ambassador Sergey Lavrov. “It is somewhat surprising though that intel was shared on this issue with Russian minister Lavrov, before being shared with ministers of allied countries,” said one EU diplomat.

Brazil’s markets crashed on their opening on Thursday, with the benchmark Ibovespa stock index down 10.47 per cent after one of the country’s leading newspapers alleged President Michel Temer had been taped endorsing bribe payments.

The real weakened 7.69 per cent against the dollar after the reports, which threaten to topple a government that had won market support with a set of crucial reforms to overhaul Brazil`s sinking public finances and rein in its over-generous pension system.

Brazil`s Treasury said it stood ready to ensure there was “adequate liquidity” in the markets and their “smooth functioning”.

“We are now in the middle of the hurricane, there is a lot of uncertainty,” said Zeina Latif, chief economist at the São Paulo-based XP Investments. 

The scandal threatens to plunge Mr Temer and his government, which was brought to power only last August with the removal by Congress of his leftist predecessor Dilma Rousseff, into another impeachment process.

O Globo reported that Joesley and Wesley Batista, respectively chairman and chief executive of Brazil’s largest meatpacker JBS, had presented a secret recording of Mr Temer approving bribes to Eduardo Cunha, the disgraced former speaker of the lower house, as part of plea bargain negotiations. 

The report comes as the country’s political and corporate establishment is reeling from sprawling corruption investigations into state oil company Petrobras in a scandal known as Operação Lava Jato, or Operation Car Wash, which has implicated senior politicians, police, union bosses and indigenous leaders in a vast web of bribery. 

According to the O Globo report, Mr Temer heard from Joesley Batista that JBS was paying Cunha to keep silent. The president is alleged to have responded: “You’ve got to keep this up, OK?” 

The report did not specify what Cunha — who was crucial in the impeachment of Ms Rousseff — was alleged to have been asked to keep silent about. 

The president’s office said in a statement that Mr Temer had “never asked for payments to obtain the silence of the former deputy Eduardo Cunha”. 

Confirming the meeting with Joesley Batista at Mr Temer’s official residence, it added that “there was nothing in the dialogue that compromises the conduct of the president”.

JBS declined to comment. Cunha, who is in jail, could not be reached for comment.

The unverified report is already rattling the unpopular government. Protesters gathered on Wednesday night outside Brasilía’s modernist presidential palace and in São Paulo’s main thoroughfare honking horns and shouting “Temer, out!” 

“If true, this is a bomb,” said Thomaz Favaro, political analyst at Control Risks, adding that if the recordings were confirmed, Mr Temer faced an investigation, public pressure to resign and impeachment proceedings in Congress. 

“The development substantially increases the risk of an unscheduled government change before the 2018 election,” he said.

If Mr Temer left power, the next in line would be Rodrigo Maia, head of the lower house of Congress, who is also under investigation.

Plea bargains in Brazil allow suspects to receive lighter sentences in exchange for giving evidence, which in the case of Operation Car Wash has led to investigation threads that have reached ever higher echelons of power. The latest batch of plea bargains prompted the Supreme Court to open probes in April into many politicians, including eight government ministers.

Mr Temer, already suffering from an approval rating of just 9 per cent, is battling to introduce an ambitious reform agenda including deeply unpopular changes to the pension system. Not only could the latest revelations trample on his plan — they could conceivably topple him. 

Alessandro Molon, an opposition lawmaker, said he had filed an impeachment request against Mr Temer. Janaína Paschoal, a jurist and co-author of the impeachment request against Ms Rousseff, said on Wednesday night that if the recordings were confirmed, Mr Temer could not remain in office.

Columnist Igor Gielow wrote in Folha de São Paulo newspaper that while a mixture of luck and skill had allowed Mr Temer to get through the Car Wash investigations so far, “now he can at the very least be accused of a crime . . . obstruction of justice”. 

Thursday 10:45 BST

What you need to know
● Europe and Asia bourses soft after Wall Street sell-off
● Futures signal more losses for Wall Street
● Dollar finds its footing but pound jumps above $1.30
● Yen, gold and Treasuries firm as traders again seek havens
● Brent crude slips back towards $52 a barrel
——————-

Hot topic

US equity futures are weaker while haven assets are again in demand, as the wave of investor risk aversion sparked by political turmoil in Washington continues to impact markets.

Traders were badly rattled on Wednesday as increasing controversy enveloped the Trump administration, shattering the calm that had seen Wall Street stocks this week hit record levels.

The S&P 500 dropped 1.8 per cent, causing the CBOE Vix index, a measure of implied volatility known as Wall Street’s fear gauge, to surge 46 per cent — though, granted its close at 15.6 was still below its historic average of about 20.

The US dollar index slid to its lowest level since Donald Trump was elected US president in November, and investors sought perceived safety, pushing benchmark Treasury yields down 11 basis points, while propelling the Japanese yen and gold both 2 per cent higher.

“The news out of Washington is alerting markets to the rising implementation risk associated with the pro-growth policies that have already been priced into markets. The more this occurs, the greater the downward pressure on stocks, the dollar and government bond yields,” Mohamed El-Erian, chief economic adviser to Allianz, told the FT.

The tone on Thursday remains negative, though the action is less febrile as traders reassess the sell-off and note the appointment of former FBI director Robert Mueller as Special Counsel to lead the investigation of Russian meddling in Mr Trump’s election victory.

“This may lead to a slowdown in market reaction, as Special Counsels take months/years to conclude their investigations, although it certainly does mark a higher stage of escalation and potential risk for the administration,” said analysts at Citi.

“We may see some stabilisation [in markets], but it will stabilise in uncertainty, so to speak.”

The new session sees S&P 500 futures indicating the benchmark index will lose 0.2 per cent to 2,353. The dollar index is barely changed at 97.56 and 10-year Treasury yields, which move opposite to the bond price, are slipping another 2bp to 2.20 per cent.

The yen is 0.4 per cent stronger at ¥110.37 per dollar and gold is up 0.1 per cent to $1,261 an ounce.

Equities

Other bourses are still playing catch-up with Wall Street’s accelerating losses into the close on Wednesday.

The pan-European Stoxx 600, which shed 1.2 per cent in the previous session, is off another 1 per cent. London’s FTSE 100 is off 1.3 per cent as foreign currency earners balk at a stronger pound.

In Tokyo the Topix index fell 1.3 per cent, little helped by a Q1 GDP reading that outperformed expectations.

Sydney’s S&P/ASX 200 lost 0.8 per cent, Hong Kong’s Hang Seng retreated 0.6 per cent and mainland China’s Shanghai Composite was 0.45 per cent lower.

Forex and fixed income

With the dollar regaining its poise, many of its peers are under pressure.

The euro is retreating from its best level since November, down 0.4 per cent to $1.1109. German 10-year Bund yields — which represents the prime European fixed income haven — are off 6bp to 0.32 per cent.

Emerging market currencies, which tend to be highly sensitive to shifts in market risk appetite, remain under severe pressure. The Turkish lira is down 1.9 per cent, the Mexican peso is off 2.1 per cent and the South African rand is slipping 2.8 per cent.

However, sterling is up 0.5 per cent to a seven-month high of $1.3032 and 10-year gilt yields are down just 2bp at 1.04 per cent after UK retail sales data came in much stronger than expected.

The Australian dollar is stronger too, up 0.2 per cent at $0.7453 after employment data came in much stronger than expected.

Commodities

Oil is pulling back from Wednesday gains, which were spurred by news that US inventories had fallen for the sixth consecutive week.

Brent crude, the international benchmark, is down 0.9 per cent to $51.74 a barrel after closing the previous session 1.1 per cent higher.

West Texas Intermediate, the main US contract, is slipping 1.7 per cent to $48.26 a barrel.

Additional reporting by Hudson Lockett in Hong Kong

For market updates and comment follow us on Twitter @FTMarkets

Japan has recorded its longest run of sustained growth in more than a decade as stimulative policy and a healthier global economy lead to a period of robust progress.

Growth for the first quarter of 2017 came in at an annualised 2.2 per cent, according to the Cabinet Office, marking five quarters of continuous expansion in gross domestic product.

The figure beat the consensus analyst forecast of 1.7 per cent and is far above Japan’s long-run growth potential of roughly 0.7 per cent. That suggests the economy is using up spare capacity and unemployment will keep on falling.

Sustained expansion signals the Japanese economy has regained its momentum following the consumption tax rise of 2014 and emerging market weakness in 2015 that led to a prolonged slowdown.

The data will boost the government of Prime Minister Shinzo Abe and give Bank of Japan governor Haruhiko Kuroda renewed hope of eventually hitting his 2 per cent inflation objective. 

“It was basically in line with our expectations,” said Masamichi Adachi, economist at JPMorgan in Tokyo. “The real side of the economy is in a very nice state.”

But he pointed to a drop-off in nominal growth — the size of the economy without adjusting for prices — which fell by an annualised 0.1 per cent because companies did not pass on higher import costs to consumers. That highlights Mr Kuroda’s struggle to generate inflation, with headline consumer prices up by just 0.2 per cent on a year ago in April.

“The real side is good but still the nominal side is vulnerable,” said Mr Adachi. “There is a tug of war between the pull from growth on one side and the deflationary mindset in the corporate and household sectors on the other.”

Growth was well-balanced across the economy with consumption and exports the biggest driving forces. Net exports contributed 0.6 percentage points of the total, highlighting how weakness in the yen since the election of Donald Trump as US president has boosted Japan’s economy.

The yen weakened from a range around ¥100-105 to ¥110-115 against the dollar following Mr Trump’s election. It traded 0.4 per cent weaker at ¥111.3 following the GDP data.

Consumption contributed 0.8 percentage points to the total. Persistent weakness in consumer spending has been one of Japan’s biggest problems in recent years. The pick-up suggests consumers may finally be gaining confidence that higher wages will last, an encouraging sign for the BoJ.

“The savings rate has stayed high, chiefly due to the slump for durable goods from the consumption tax hike in April 2014, but it appears to finally be normalising,” said Takeshi Yamaguchi, economist at Morgan Stanley in Tokyo.

Residential investment, business investment and government consumption each contributed 0.1 percentage points to growth. However, public investment — which was expected to rise given fiscal stimulus plans announced by the government last year — came in flat.

Inventory growth contributed 0.4 percentage points to the total. By its nature, inventory growth cannot continue forever, suggesting the true pace of underlying growth in Japan’s economy is running a little below an annualised 2 per cent.

Call it the Trump fade?

The so-called Trump trade captivated Wall Street after the surprise election of Donald Trump last November. After years of stagnant economic growth in the wake of the financial crisis, the prospect of Mr Trump’s pro-business agenda, combined with Republican control of both executive and legislative branches of the US government, breathed new life into the ageing equity rally, sent the dollar to its highest levels in 14 years and threatened to finally end an epic, multi-decade bull market in bonds.

While the Trump trade had already fizzled this year as Mr Trump’s plans prove harder than hoped to enact, reports that Mr Trump sought to interfere in an FBI investigation sent key market benchmarks back down to levels last seen before the election.

The concern is that controversies surrounding the US president will affect efforts to push ahead with plans for tax cuts, infrastructure spending and deregulation, all of which were seen as boosting economic growth and corporate earnings.

“The risk premium related to policy uncertainty has gone up,” said Devin Ryan, a managing director at JMP Securities.

Currencies

The US dollar has given up all the gains made after the election as hopes that Mr Trump would turbocharge the US economy relative to its peers have receded.

The dollar index, which measures the greenback against a basket of other currencies, fell 0.62 per cent to 97.49 on Wednesday — the lowest level on a daily fix basis since November 4, according to Bloomberg data. That is a 6 per cent decline from its peak.

While business and consumer confidence has remained high, US economic data have been choppy at best at a time when other trading partners, particularly the eurozone, are experiencing a brightening in sentiment.

The yen’s performance against the dollar was particularly strong on Wednesday, with the greenback off 1.9 per cent to ¥110.96. The Japanese currency tends to perform well during times of higher geopolitical tension. Meanwhile, the euro gained 0.71 per cent on the dollar, settling above $1.11 against the dollar for the first time since the US election, and the UK pound rose 0.4 per cent.

Stocks

News that the Justice department has appointed a special counsel to investigate the Trump campaign’s ties to Russia came long after the end of the trading day, but the mounting political furore had already sent major US equity market benchmarks tumbling.

The S&P 500, the Dow Jones Industrial Average, the Dow Jones Transportation Average, the Nasdaq Composite and the Russell 2000 all recorded their biggest one-day declines since before the election.

The big gainers on Wednesday were bond proxies, such as real estate investment trusts and utilities, which — just like US Treasury bonds — typically draw buyers when investors are reducing their risk.

The equity market indices had all been hitting record highs in recent months but, beneath the surface, a sector rotation has been under way that reflected doubts about the Trump agenda.

Investors had been moving away from financials and energy stocks, which were seen as likely beneficiaries of the administration’s deregulation agenda or fiscal policies that might stoke inflation and push interest rates up.

A market measure of long-term inflation expectations known as the 10-year break-even rate fell further below its pre-election level on Wednesday. The “Trumpflation” expectations that drove stock gains just after the election had already given way among equity investors to a focus on buoyant profit growth at US companies.

A five-quarter earnings recession ended in the third quarter of last year and profit increases gained momentum in 2017. In the first quarter, companies in the S&P 500 reported earnings growth of nearly 14 per cent a share, the first quarter of double-digit earnings growth year over year since the fourth quarter of 2011.

Tech, among the sectors most vulnerable to selling in market downturns, did indeed sell off sharply on Wednesday, but it has been the winner this year as these companies offer the prospect of high growth notwithstanding the underlying economy.

Government bonds

With the focus suddenly on economic and business risks from the Trump administration’s difficulties, investors sought the safety of government bonds — pushing the yield on the benchmark 10-year US Treasury yield, which falls when the price of the bond goes up, 10 basis points lower to 2.22 per cent.

That was its second biggest one-day decline since the aftermath of the Brexit vote, and it meant that the difference between short-dated Treasury yields and longer dated yields such as the 10-year narrowed.

The two-year/10-year spread “flattened” by the most it has done on any day since December. That measure is important for banks, which make money from lending at longer-dated, higher interest rates while paying lower interest on the short-dated deposits that fund their operations.

And it is the reason bank stocks were hard hit on Wednesday, with Morgan Stanley, Bank of America and Goldman Sachs all down more than 5 per cent.

Gold

Investors also turned to the perceived safe haven of gold on Wednesday, with the precious metal enjoying its best day since the immediate aftermath of the Brexit vote last June. The commodity climbed $24, or just under 2 per cent, to $1,261 and erased all of the losses it tallied earlier this month.

The spot price gain was the commodity’s fifth consecutive trading day rise, and a consequence was that exchange traded funds that invest in the precious metal or in gold miners’ stocks — including funds from iShares, SPDR and VanEck — were all up more than 1.5 per cent.

Volatility

Measures of volatility also rose with the political temperature, affecting all asset classes and geographies. The most widely watched of the volatility measures created by the CBOE, the Vix index of implied US equity volatility, which has earned the nickname of Wall Street’s “fear gauge”, had its biggest one day rise since September 2016.

The Vix remains at historically low levels, however. Breaking just above 15, it is still only back up to its highest level since April.

Google has unveiled a new kind of standalone virtual reality headset that does not need to be wired to a PC or external sensors to offer more realistic graphics and movement tracking, in the hopes of kick-starting what has been sluggish consumer adoption of the technology.

Device makers HTC and Lenovo are working with Google and chipmaker Qualcomm to launch the headsets starting later this year, Google announced at its I/O developer conference in Silicon Valley on Wednesday.

“The whole device is designed just for VR,” said Clay Bavor, Google’s head of VR, drawing a contrast with devices such as its own Daydream viewer and Samsung’s Gear VR, which repurpose a standard smartphone to form the basis of a headset’s screen and processing power.

The new headset will offer “positional tracking”, a technique that helps users to look and move around inside a virtual world that until now has only been available on PC-based VR headsets such as Oculus Rift and HTC’s Vive. Positional tracking is seen by many in the VR industry as essential for achieving the comfort and realism that will win over more users to the technology.

All this makes Google’s standalone headset easier to use, Mr Bavor said. “Getting into VR is as easy as picking the thing up,” he said. “By building every part of the device specifically for VR, we’ve been able to optimise everything . . . to give a stronger sense of being transported.”

Most of Google’s I/O keynote was focused on artificial intelligence, with improvements to its virtual assistant and enhancements to apps such as YouTube and Photos. While those products are available on hundreds of millions of devices today, virtual reality is a lot further away from mainstream adoption.

Google, like other companies investing heavily in VR, is still experimenting with products and designs to see what will capture consumers’ attention, in the hopes of avoiding a fate similar to 3D TVs, whose novelty quickly faded.

Facebook’s Oculus and Intel have each previously shown off their own prototypes of standalone VR headsets but neither company has yet released a version that consumers can buy.

Intel has said that the first headsets based on its “Project Alloy” design, which it describes as “merged reality” because it incorporates elements from the real world as well as digital images, will launch in the fourth quarter of 2017. Oculus previewed its “Santa Cruz” prototype of a fully integrated VR headset, which unlike its Rift headset does not require a wired PC connection, at its Connect developer conference last October.

Google is working with mobile chipmaker Qualcomm on the device. Qualcomm first showed a prototype for a standalone VR headset in September, in the form of a “reference design” to demonstrate to manufacturers what was possible with its latest chipsets and sensors.

“Our companies share the same vision: to make it possible for everyone to enjoy rich and immersive VR experiences on a smartphone device or a dedicated heat-mounted display while being fully mobile, rather than being restricted by cables or limited to predefined rooms set up for outside-in tracking,” said Keith Kressin, senior vice-president for product management at Qualcomm Technologies.

With its latest standalone product, Google’s new WorldSense platform is building on its experience with the Daydream virtual reality software that it unveiled a year ago and its Tango augmented reality sensors.

Until now, Google has offered two separate platforms for virtual and augmented reality. Tango was first released in 2014 and the first smartphones featuring its twin-camera system were released only within the past year by Lenovo and Asus. Daydream was announced a year ago with its Pixel smartphone, released in October, the first compatible device that consumers could buy.

Developers of Daydream apps say that usage data suggest sales of the headset remain small, in part due to the short supply of smartphones that meet the specifications in screen resolution and processing power that Google’s system demands. Only a handful of Daydream compatible devices are on the market, from manufacturers including Motorola and Huawei. Google said on Wednesday that the latest devices from Samsung and LG would support Daydream later this year.

The virtual reality market continues to attract new entrants even as sales to consumers remain slow to take off. Microsoft’s latest version of Windows 10 will support a variety of what it calls “mixed reality” headsets made by manufacturers including Acer and HP, which will ship this summer.

Samsung released a new version of its Gear VR headset, which incorporates its flagship Galaxy smartphones, when it launched its S8 in April. The new Gear also includes a motion-sensitive controller similar to the one that Google introduced with Daydream. Tencent is also planning to launch a virtual-reality headset later this year, people familiar with the matter have told the Financial Times.

US stocks were on track for their worst session for eight months on fears that US President Donald Trump’s ability to push through his pro-growth policies will be sidelined by deepening political controversy.

The Wall Street benchmark fell 1.3 per cent to 2,369 on Wednesday, shedding all its gains for May, with financial stocks the worst hit as the S&P banks index retreated 3.8 per cent. Shares of some of the country’s largest financial institutions, including Morgan Stanley and Bank of America, declined more than 5 per cent.

The Dow Jones Industrial Average was 1.3 per cent weaker while US Treasury yields sank to their lowest levels in a month. Wall Street’s so-called fear gauge, the Vix index of implied volatility, surged by its greatest amount since September.

Reports that Mr Trump had sought to interfere in an FBI investigation is the latest controversy to ensnare the White House, damping global risk appetite and prompting some investors to seek the perceived safety of government bonds, gold and the Japanese yen. Gold climbed the most in a day since the immediate aftermath of the Brexit vote last year.

“Even though there’s a unified government, it’s a lot less unified than it looks,” former Federal Reserve chairman Ben Bernanke said on Wednesday, characterising the Trump trade as “overdone”.

“The markets have unwound a good part of the reflation trade,” he added, referring to the stock market rally fuelled by higher growth and inflation expectations.

The US dollar reversed the near 6 per cent gain it enjoyed after the election, as the euro climbed back above $1.11 for the first time since November. The dollar index, which tracks the greenback against a basket of its peers, dropped 0.5 per cent to 97.58.

Lee Hardman, currency analyst at MUFG, said the move provided “further evidence of the ongoing loss of confidence in the Trump administration’s ability to materially boost US growth”.

The dollar index had climbed to a 14-year high of 103.82 in the aftermath of Mr Trump’s election victory as investors bet that his presidency could boost the world’s biggest economy and encourage the Fed to tighten monetary policy at a faster pace.

Stephen Gallo, European head of FX strategy at Bank of Montreal, pointed out that a stronger euro was the main driving force of the fall in the dollar index, as it “has far and away the biggest weighting” in it.

“I am sceptical about the ability of these Trump headlines to severely weaken the dollar from here on a broad trade-weighted basis, and of their ability to have a meaningful impact on policy at the Federal Reserve.”

Meanwhile, improving corporate earnings helped propel the US stock market to record levels this week with the S&P 500 on Tuesday hitting an intraday high of 2,405.8.

“Up ahead, the true test for US reflation I think is not so much the dollar as the S&P 500, that’s where the over-positioning stands, and likely much of it unhedged,” said Geoffrey Yu, head of the UK investment office at UBS Wealth Management.

“If we see more days where S&P 500 and DXY move in tandem lower, then it would be a strong signal of concern — a total reversal of what we saw in November. We are not there yet, but it’s certainly the relationship to watch.”

US government bonds remain a supposed haven, even when the US government is the source of market angst. The 10-year Treasury yield, which moves opposite to the bond price, is down 11 basis points to 2.22 per cent.

The Japanese yen is among the main currency beneficiaries of the dollar’s woes, strengthening 1.9 per cent to ¥111.03 per dollar.

Mr Bernanke added: “It always puzzled me a little bit — it still does — that markets are blasé about political risk until the last moment.”

Donald Trump is facing the gravest crisis of his presidency following the claim that he urged James Comey, the recently ousted FBI head, to halt an investigation into Michael Flynn, the retired general who was briefly his first national security adviser.

According to a memo made by Mr Comey after a private meeting in February, Mr Trump asked him to stop investigating Mr Flynn, who had been fired the previous day for lying about conversations he had with the Russian ambassador. Mr Comey’s documentation of the Oval Office meeting has sparked uproar in Washington and prompted some Republicans to call for independent investigations into the actions of the president.

John McCain, the Arizona Republican senator, said the scandals engulfing Mr Trump were nearing “Watergate size and scale”, in a reference to the issue that toppled Richard Nixon. “It is a centipede and the shoe continues to drop,” said Mr McCain.

The White House was dealing from the political fallout from Mr Trump’s decision last week to fire Mr Comey when it emerged on Tuesday that the former prosecutor had kept notes of their February meeting. The revelation is just the latest in a raft of Russia-related controversies casting a dark shadow over Mr Trump and jeopardising his ability to pass legislation.

Susan Collins, a Maine Republican senator, said the Russia-related scandals, including the ouster of Mr Comey, were “deeply troubling”. She told CNN that the Senate intelligence committee — one of several Congressional bodies investigating Russian influence in the 2016 election — needed to hear directly from Mr Comey and obtain access to his accounts of his White House meetings.

The White House denied Mr Comey’s account in a statement on Tuesday. “The president has never asked Mr Comey or anyone else to end any investigation, including any investigation involving General Flynn,” it said. “This is not a truthful or accurate portrayal of the conversation between the president and Mr Comey.”

In a worrying sign for the president, Paul Ryan, the Republican speaker of the House who has been reluctant to criticise Mr Trump, backed a push by the House oversight and government reform committee to demand that the FBI hand over any “memoranda, notes, summaries and recordings” regarding communications between Mr Trump and Mr Comey.

Jason Chaffetz, the Republican congressman who chairs the committee, said he wanted to see the memo. “I need to see it sooner rather than later. I have my subpoena pen ready,” he tweeted on Tuesday. AshLee Strong, spokesperson for Mr Ryan, said lawmakers “need to have all the facts, and it is appropriate for the House oversight committee to request this memo”.

Adam Kinzinger, a Republican congressman from Illinois, said the existence of the Comey memo meant Congress should now push for a special prosecutor to get to the bottom of the Russia-related controversies. “It is time that we do whatever is necessary . . . this has raised real red flags,” Mr Kinzinger told CNN.

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John Kasich, the Republican Ohio governor who fought Mr Trump for the 2016 GOP presidential nomination, also called on Congress to become more assertive. “This is not a time for Republicans to hide,” said Mr Kasich, who could challenge Mr Trump in the 2020 election.

The revelation about the Comey memo came the day after Mr Trump was engulfed by another controversy following the claim that he revealed highly classified information about a potential Isis plot to Sergei Lavrov, the Russian foreign minister, in a meeting in the Oval Office last week.

On Wednesday, Russian president Vladimir Putin waded into that controversy by offering to provide the US Congress with a transcript of the conversation between Mr Trump and the Russian foreign minister. Senior Republicans, including Mr McCain, had criticised the president for allowing Mr Lavrov and Sergei Kislyak, the Russian ambassador at the centre of the Flynn investigation, into the Oval Office. The White House did not respond to an inquiry about whether the Russian delegation had been permitted to record the Oval Office conversation.

Democrats have pounced on the existence of Mr Comey’s memo as further evidence that Mr Trump has attempted to obstruct justice, an accusation they also made about his abrupt dismissal of Mr Comey. “The country is being tested in unprecedented ways. History is watching,” said Chuck Schumer, the top Democrat in the Senate.

Adam Schiff, the top Democrat on the House intelligence committee, which is also investigating Russian influence, said Mr Comey should testify as soon as possible.

The Comey memo is the latest episode in a multi-faceted scandal about the role of Russia in the 2016 election that has engulfed Mr Trump and his top officials. Mr Trump fired Mr Flynn in February, after 24 days on the job, following a Washington Post report that the retired general had misled Mike Pence, vice-president, about conversations with Mr Kislyak.

Mr Trump has frequently dismissed the FBI investigation as a “witch hunt” orchestrated by frustrated Democrats. Ms Collins, the Maine Republican, on Wednesday said she had spent three days at CIA headquarters looking at evidence pertaining to the Russian investigation, and said she disagreed with the public statements made by the president on the issue.

Follow Demetri Sevastopulo on Twitter: @dimi

If America’s political system were working as it should, Donald Trump would be on his way out. Either Congress would have started impeachment, or people around the president would have declared him unfit for office. But Mr Trump retains an ace up his sleeve. No elected Republican dares cross him. Any who think of standing up to him know they would risk an electronic lynching that could finish their career. Just ask Jeb Bush.

America’s government is at a dangerous impasse. Most people know Mr Trump is unfit to be commander-in-chief. But nobody with the power to redress it has found the courage to act.

The tragedy for America — and the world — is that this is likely to persist at least until next year’s US midterm elections. Even overt signs that Mr Trump is trying to obstruct justice, which was the first article of impeachment against Richard Nixon, are glossed over. Between a quarter and a third of Americans are diehard Trump supporters. They have the power to eject rebel Republicans in primary elections.

Trumpians are stoked by a closed ecosystem of news sites that presents the world in a radically different light to the rest of the media. Thus Mr Trump did not fire James Comey, the director of the Federal Bureau of Investigation, last week. Mr Comey resigned, according to Fox News. Likewise, Mr Trump did not disclose vital intelligence to Russia’s foreign minister. Nor did he put pressure on Mr Comey to shut down the investigation into Michael Flynn, Mr Trump’s first national security adviser. These are fake stories.

Most of the sites ignored this week’s revelations and focused on the shooting of Seth Rich, a Democratic staffer who had apparently forwarded thousands of emails to WikiLeaks last summer. Readers were left in no doubt that Hillary Clinton, or people close to her, were involved in Mr Rich’s murder.

We should not underestimate the power Mr Trump draws from these alternative narratives. Whenever the elites express outrage at his actions, his supporters take pleasure in their anguish. Mr Trump knows how to cater to his base. If that means passing secrets to the Russians the day after firing the man investigating his campaign’s alleged Russia collusion, all the better. Scholars call this “negative partisanship”. People no longer join a party because they believe in its agenda but because they despise the other one. By mocking his opponents, Mr Trump is literally delivering on what he promised. It is a mandate for nihilism.

This poses a terrible dilemma for Republicans. Some are hoping to bide their time until midterm elections. Mr Trump’s approval ratings are so low that if the polls were held today Republicans would lose control of the House of Representatives, and possibly the Senate. At that point, Republicans would start to abandon Mr Trump’s ship. Democrats may well campaign on a promise to impeach Mr Trump. But that is almost 18 months away. Other Republicans are hoping to extract what they can before the Titanic starts to sink.

Most, such as Paul Ryan, the House Speaker, are prepared to suffer the indignity of working with Mr Trump if it gives them the chance to pass a big tax cut. In Mr Ryan’s view, such a cut would unleash America’s animal spirits and restore freedom to individuals.

It is a coherent position. But Mr Trump keeps making it harder for Mr Ryan to build the case for it. The chances are now at least as good that the firestorm around Mr Trump will engulf his economic agenda. Even if Mr Ryan can pull off tax reform, would the bargain have been worth it? The answer is no. Taxes rise and fall. But a great party cannot erase how it acted at a critical moment in the history of the republic.

For decades Republicans have stood for national security and the moral fibre of American leadership. Mr Trump is tearing up those principles before their eyes. It does not matter what liberals think. Ditto for independents, the media and the US diplomatic service. The only people with the power to hold Mr Trump to account are Republicans. They are turning a blind eye. Just a handful of the 290 Republicans in Congress have called for a special prosecutor to investigate Mr Trump. My bet is that, if they were secretly balloted, a majority would support the idea.

It is possible more Republicans will come into the open when Mr Trump selects a new FBI head to replace Mr Comey. If he nominates a stooge, the fallout will be hard to contain. More devastating leaks from the intelligence agencies could also tip the waverers. Until then, however, Republicans are sticking to their Trumpian bargain. They had better hope those tax cuts are worth it.

edward.luce@ft.com

Donald Trump in February asked James Comey, then head of the FBI, to halt an investigation into Michael Flynn, the former national security adviser, according to a memo that the law enforcement official wrote at the time. 

During a private Oval Office meeting with Mr Comey, Mr Trump said: “I hope you can let this go,” in a reference to the FBI investigation into Mr Flynn, according to the memo.

The revelation marks the latest episode of a crisis that is consuming the White House. Mr Trump came under huge criticism last week when he fired Mr Comey whose agents are investigating Russian interference in the US election and alleged links between the Trump campaign and Moscow. 

The emergence of the memo, which was disclosed by the New York Times, came one day after the Washington Post reported that Mr Trump had revealed top secret information on a potential Isis plot with the Russian foreign minister, Sergei Lavrov.

Mr Comey shared the memo — part of an extensive effort to document his interactions with the president — with top FBI officials, according to an associate who confirmed the existence of the memo and some of the lines that the FBI head wrote in it.

On Capitol Hill, Democrats pounced on the latest development about Mr Trump as evidence of a possible obstruction of justice. “If true, this is yet another disturbing allegation that the president may have engaged in some interference or obstruction of the investigation,” said Adam Schiff, the top Democrat on the House intelligence committee. “Enough is enough. Congress really needs to get to the bottom of this.”

Many Republicans hunkered down as the latest bombshell rocked Mr Trump’s young presidency, but some members suggested that the scandals were reaching a new level. John McCain, the Arizona Republican senator who has been one of the harshest GOP critics of Mr Trump, said the controversies engulfing the president were of “Watergate size and scale”, in a reference to the scandal that brought down Richard Nixon.

“Watergate was octopus-like, with so many tentacles it took an army of reporters to keep up. We’re not there yet, but Trump has one distinction,” said Larry Sabato, a politics expert at the University of Virginia. “We have never had a president so consumed by controversy and scandal this early in his term.”

Enough is enough. Congress really needs to get to the bottom of this

In a worrying sign for Mr Trump that Republicans were becoming more nervous, Jason Chaffetz, the GOP head of the House oversight and government reform committee who has subpoena power, wrote to the FBI demanding “all memoranda, notes, summaries and recordings” regarding communications between Mr Trump and Mr Comey.

“@GOPoversight is going to get the Comey memo, if it exists. I need to see it sooner rather than later. I have my subpoena pen ready,” Mr Chaffetz tweeted.

A spokesperson for Paul Ryan, the Republican House speaker who was critical of Mr Trump during the campaign but who has been publicly supportive since his inauguration, said Mr Ryan supported the move by Mr Chaffetz to investigate the matter.

“We need to have all the facts, and it is appropriate for the House oversight committee to request this memo,” said spokesperson AshLee Strong.

The Comey memo is just the latest episode in a multi-faceted scandal about the role of Russia in the 2016 election that has engulfed Mr Trump and his top officials. In addition to the FBI probe, several Congressional committees are investigating the issue.

Mr Trump fired Mr Flynn in February, after 24 days on the job, following a Washington Post report that the retired general had misled Mike Pence, the vice-president, about conversations he had held with Sergei Kislyak, the Russian ambassador to the US. 

The president frequently dismissed the FBI investigation, saying it was a “witch hunt” orchestrated by frustrated Democrats. But his comments have been contradicted by Mr Comey and other officials, who have publicly stated that the probe is serious.

The existence of the memo will increase pressure on Mr Comey to testify before Congress. He declined an invitation by the Senate intelligence committee to appear on Tuesday at a closed session, but is expected eventually to appear before lawmakers in a public hearing. 

On Friday, Mr Trump implied that he may have taped his conversations with the FBI director. “James Comey better hope that there are no ‘tapes’ of our conversations before he starts leaking to the press!” Mr Trump tweeted. 

The White House repeatedly has refused to confirm or deny whether Mr Trump has such tapes. If they exist, Congress should see them, Senator Angus King, an independent member of the Senate intelligence committee, said on Tuesday. “If there were tapes we need to have them . . . This is a very serious matter,” said Mr King.

Matthew Miller, a justice department spokesman in the Obama administration, last week said Mr Comey habitually kept written accounts of events he found potentially inappropriate. 

The associate of Mr Comey told the Financial Times that, “as a general matter, there was a real effort to document” the exchanges with the president.

The White House denied Mr Comey’s account. “While the president has repeatedly expressed his view that General Flynn is a decent man who served and protected our country, the president has never asked Mr Comey or anyone else to end any investigation, including any investigation involving General Flynn,” it said. “This is not a truthful or accurate portrayal of the conversation between the president and Mr Comey.” 

Senator Richard Burr, who leads the Senate intelligence committee’s Russia probe, said Mr Comey had not informed him of the exchange with the president. 

Mr Trump abruptly fired Mr Comey last week, explaining the move as motivated by “this Russia thing”, a reference to the FBI investigation.

Andrew McCabe, the acting FBI director who had served as Mr Comey’s deputy, told Congress last week that “there has been no effort to impede our investigation to date”.

The memo quotes the president as saying: “I hope you can see your way clear to letting this go, to letting Flynn go.” 

When Mr Trump added: “He is a good guy. I hope you can let this go,” Mr Comey replied: “I agree he is a good guy.” 

By the time of the February 14 meeting, Mr Comey had become uneasy about Mr Trump’s invitations to meet at the White House, including for a private dinner in late January, according to James Clapper, the former director of national intelligence, who spoke with the FBI chief about it. 

“He mentioned that he had been invited to the White House to have dinner with the president and he was uneasy with that,” Mr Clapper said, adding that Mr Comey feared “compromising the integrity of the FBI”.

As Washington struggled to make sense of the latest developments, there were hints of the fierce political combat that may lie ahead. Within hours of the first reports of Mr Comey’s memo, Mr Trump’s campaign arm sent out a fundraising appeal entitled “sabotage”, blaming the media and “special interests” for undermining the president. 

“There are people within our own unelected bureaucracy that want to sabotage President Trump and our entire America First movement,” read the emailed alert, which suggested donations in amounts ranging from $1 to $2,500. 

Follow David J Lynch and Demetri Sevastopulo on Twitter:

@davidjlynch

@dimi

The first time China attempted to build a large passenger jet, it tried — and failed — to reverse-engineer a Boeing 707 that crash-landed in Xinjiang in 1971.

The latest vehicle for China’s aviation dream, the Comac C919, has just completed its first test flight after Beijing decided to take a different path: buying parts from European and US aviation companies rather than stealing their technology.

After many mis-steps, the maiden flight of the 158-174 seat aircraft was a big moment for China, economically and politically.

The government told state-owned Comac in a congratulatory note that the C919 “carries great weight and importance to the country’s innovation drive”. Seeing it “flying in the blue sky makes generations of Chinese people’s dream come true”, it added.

The C919 is designed to compete with the workhorses of modern short-haul aviation, the Airbus A320 and Boeing 737. It has a ready-made customer base as China is forecast to overtake the US as the world’s biggest aviation market in 2024.

Comac has also built a smaller regional jet, called the ARJ21, and is developing a long-haul aircraft alongside Russia’s United Aircraft Corp.

China has been trying to build large passenger aircraft since the Mao Zedong era, when Communist officials bridled at the prospect of having to fly overseas on foreign-made aircraft.

Unless China learns how to make the most sophisticated elements of a plane, they’ll always be a step behind

President Xi Jinping, who often travels abroad on a Boeing 747 operated by Air China, is unlikely to start flying on the C919 soon, as it will be at least a couple of years before it goes into mass production.

But China’s airliner project is still driven by politics as much as policy.

Throughout the sprawling Comac factory in Shanghai, Communist propaganda banners bearing slogans from Mr Xi and others urge workers to knuckle down to achieve the Chinese aviation dream.

“Remember your mission, march forward and win the ‘three battles’,” says one, referring to the markets for regional, short-haul and long-haul jets.

Mr Xi is keen to show progress on high-profile initiatives such as the C919 ahead of the next five-yearly congress of the Communist party in the autumn, where he will be trying to strengthen his grip on power.

By successfully bringing the C919 into mass production, Comac would join the select club of companies with the technical expertise to build large passenger jets including Boeing of the US, Europe’s Airbus, Canada’s Bombardier and Russia’s Sukhoi and Tupolev.

In addition to prestige, China wants to reduce its reliance on foreign aircraft manufacturers, primarily Boeing and Airbus. But, paradoxically, the C919 has only got this far because of the co-operation of western suppliers.

The wings and the tail are made in China, but many of the most important and most technologically advanced parts are purchased from foreign companies, such as GE and Safran, which provided the engine, and Honeywell, which supplied the wheels and brakes and communication and navigation systems.

Buying components from these industry leaders has helped to speed up the development process. But the C919 is still 10-15 years out of date, compared to the latest versions of the A320 and Boeing 737, meaning it will probably cost more to run.

That need not dent sales of the aircraft as most of China’s airlines are state-controlled and they can easily be encouraged to use it. They have already made orders for more than 500 C919s.

If China really wants to prove it can compete with Boeing and Airbus, rather than Tupolev and Sukhoi, it will have to sell its aircraft in developed markets, which will require better technology and hard-to-achieve certification from European and US regulators.

That is where Beijing may well hit the limits of Chinese aviation with western characteristics. Chinese officials have a history of covering up technical problems with domestically produced aircraft and not reporting accidents.

Corruption, political interference and a lack of transparency make western regulators nervous, and undermine the potential for innovation in China.

Derek Levine, who wrote a book on China’s aviation ambitions, warns that “unless China learns how to make the most sophisticated elements of a plane, they’ll always be a step behind”.

ben.bland@ft.com

Jamie Dimon endured a rough ride at the annual meeting of America’s biggest bank on Tuesday morning, as shareholders repeatedly attacked the JPMorgan Chase chief over his ties to the administration of Donald Trump.

In December Mr Dimon was named chairman of the Business Roundtable, a group of almost 200 CEOs which is among the most prominent lobbying groups in Washington. Mr Dimon, chief executive of JPMorgan for the past 11 years and chairman for 10, is also a member of Mr Trump’s strategic and policy forum, which meets regularly to shape the economic agenda.

At the meeting in Wilmington, Delaware, a succession of shareholders challenged Mr Dimon to publicly disavow some of Mr Trump’s policies, such as his curbs on immigration from predominantly Muslim countries and his building a wall on the border with Mexico. One shareholder noted that users had sent more than 4000 messages to a website, backersofhate.org, urging Mr Dimon to “distance himself from hateful policies of human suffering”.

After staying silent throughout several speeches from the floor, Mr Dimon defended the bank’s record on Mexico, its support for lesbian, gay, bisexual and transgender people, and its funding of private prisons.

Finally, he said of Mr Trump: “He is the president of the United States, he is the pilot flying the aeroplane. I’d try to help any president of the US because I’m a patriot. That does not mean I agree with every policy he is trying to implement.”

Mr Dimon has long been the most outspoken of the big-bank chiefs in the US, often using his shareholder letter as a platform for taking positions on matters of public policy, and for challenging the regulatory framework put in place since the 2008 crisis.

I’d try to help any president of the US because I’m a patriot. That does not mean I agree with every policy he is trying to implement

In the weeks after the presidential election, the 61 year old was approached by members of Mr Trump’s transition team to serve as Treasury secretary but declined, saying he was unsuited to the role, according to people familiar with the discussions.

As hostile questioning resumed after his remarks at the Tuesday meeting, Mr Dimon tried to lighten the mood, saying “you’re starting to hurt my feelings”. The shareholder admonished him by saying that just by hearing him out, the chief executive would earn more than $100.

“I hope it’s worth it!” said Mr Dimon, who was paid $28m last year.

“This is not a laughing matter,” the shareholder replied.

The meeting stood in contrast to the peaceful gathering at the Goldman Sachs building in Jersey City at the end of last month, when chief executive Lloyd Blankfein faced just two questions from the floor, both of them friendly. Mr Blankfein, who is also chairman of the board, closed the meeting within just 24 minutes.

Mr Dimon wrapped up Tuesday’s proceedings by saying the entire board “takes this feedback seriously”.

Ana Maria Archila, co-executive director of the Center for Popular Democracy, said after the meeting that until Mr Dimon takes a stronger stand her organisation would continue to associate JPMorgan Chase with Mr Trump’s “anti-immigration” agenda.

Ms Archila arrived in the US 20 years ago to reunite with her father, who had fled political violence in Colombia.

“I don’t think we have a plan to really inflict economic damages on the bank just yet,” she said. “But what we do have a plan for, is to force them to clarify whose side they’re on.”

Twitter co-founder Biz Stone is returning to guide the messaging platform’s internal culture, as it tries to turn around slow user growth and declining revenue in the face of increased competition.

Jack Dorsey, Twitter chief executive and co-founder who returned to try to revive the company almost two years ago, asked Mr Stone back during a relaunch of the company’s weekly Friday afternoon tradition of Tea Time for employees in San Francisco.

The 43-year-old Mr Stone said founders create the “personality of a company” and he wanted to bring that energy and feeling to Twitter, which he described as “the most important work of my life”. He will not replace anyone at Twitter but will work with Mr Dorsey and Leslie Berland, Twitter’s chief marketing officer.

“Jack coming back was a big step forward. And now, it’s my turn — I’m returning to full-time work at Twitter starting in a couple of weeks!” he said in a blog post. “I’ll shape the experience internally so it’s also felt outside the company.”

Shares in Twitter, which have risen 21 per cent in the last three months, were up 2.3 per cent to $19.66 at lunchtime in New York trading.

Mr Stone was one of three co-founders alongside current chief executive Jack Dorsey, who returned to run the company in 2015, and Ev Williams, a Twitter board member and now chief executive of Medium, the blogging site.

I’ll shape the experience internally so it’s also felt outside the company

He played a key role defining Twitter’s role in the world, advocating for it as a free speech platform by creating its philosophy of ‘tweets must flow’.

Now, Twitter is facing a challenge to balance this freedom of expression with a crackdown on abuse and trolls on the platform. It is also playing a more central role in politics than ever before, as US president Donald Trump takes to the forum to make announcements, intervene in debate and spark controversy.

“As I truly believe, and as I’ve written before, the tweets must flow. Twitter has woven itself into the fabric of our global society,” Mr Stone wrote on Tuesday.

In a tweet, Mr Dorsey said he was excited to have Mr Stone’s “energy and heart” back at Twitter.

Investors have been worried that about the pace of user growth and falling revenues at Twitter, as it encounters increased competition from both the larger social networks offered by Facebook and newer entrants such as Instagram and Snapchat. Mr Dorsey returned to try to shake up the product and entice a larger audience.

Despite the underlying concerns shares in Twitter rebounded after its earnings report last month, when it beat analyst expectations on earnings and revenue and lifted daily active users by 14 per cent-year-on-year, lured in part by a surge in political and news accounts.

Europe’s top court has ruled that a key EU-Singapore agreement requires backing by all EU member states — but only for a narrow set of issues — in a decision that could chart the way for a post-Brexit trade accord with the UK.

The European Court of Justice ruled that EU member states must sign off on specific areas related to investment in the Singapore trade deal. However, it added that the remainder of the agreement was the exclusive competence of the EU, a finding that could make it easier to push through trade deals with Brussels.

The Institute of Directors, one of Britain’s leading business organisations, welcomed the decision. “This ruling will probably make it easier for the EU to conclude trade deals without fear of as many hold-ups from national and sub-national legislatures,” said Allie Renison, head of EU and trade policy.

Linklaters, the UK law firm, hailed “the most significant ECJ case on EU trade policy for 20 years” and added that Britain would now want to consider whether to moderate its ambitions for a future UK-EU trade deal so as to secure agreement by qualified majority voting rather than unanimity.

In its widely awaited decision, the ECJ ruled that the EU had exclusive competence in all but two aspects of the Singapore agreement. Only for issues in those two areas — portfolio investments and a dispute-settlement regime for investments — would a deal require unanimous backing by member states.

“[The ruling is] the most significant ECJ case on EU trade policy for 20 years

One trade expert suggested that provisions on investment might have to be left out of a future UK-EU trade agreement to avoid political pitfalls.

“There will need to be reflection on whether to maintain the current structure of deep and comprehensive free-trade agreement that includes an element of investment,” said John Clancy, senior adviser at FTI consulting and a former EU trade spokesman.

“It simply suggests that the EU and the member states will probably be forced to carve out investment in any future EU-UK trade deal going forward.”

But Theresa May, UK prime minister, has set out a goal of reaching a comprehensive deal with the EU. Many analysts argue that the sheer range of issues to be addressed in negotiations between Britain and the bloc mean that a requirement for unanimity may be unavoidable.

“If you only want to have an EU exclusive competence deal it’s more likely that you will not be able to have this bold and ambitious trade agreement with UK,” said Lourdes Catrain, a partner in Brussels at law firm Hogan Lovells.

Ms Catrain said the anticipated EU-UK deal would be much broader in scope than the Singapore pact given the extent and depth of the trading links forged in the 44 years since Britain joined the bloc.

“If it is a mixed agreement, the ratification is going to be a lengthy process but that should not prevent that a majority of the agreement can be provisionally applied,” she said.

The ECJ ruling on Singapore contrasted with a non-binding opinion on the case by a senior EU judge in December. That opinion held that the EU shared competences with member states on issues such as transport, some intellectual property rights and labour and environmental standards. A similar view in Tuesday’s ruling could have made trade agreements considerably more arduous to agree.

The endorsement of trade deals by member states on a country-by-country basis is highly sensitive after political resistance to a showpiece EU-Canada deal from a regional Belgian parliament nearly caused the agreement’s collapse last year.

At a time of rising anti-establishment sentiment in Europe, there is anxiety in Brussels that future trade deals could be hobbled if they too are sent for approval to national parliaments and meet similar resistance.

The commission had earlier sought the opinion of the Luxembourg court on the Singapore deal in the light of uncertainty over whether it could be concluded only by EU institutions or jointly with member states.

A spokesman for Jean-Claude Juncker, EU Commission president, tweeted that he “welcomed” the ruling. “We shall carefully analyse with the European Parliament and member states,” he said.

Indian agents have raided the home of the country’s former finance minister as part of an investigation into alleged violations of strict foreign investment rules.

India’s Central Bureau of Investigation said it had visited locations in the southern city of Chennai on Tuesday morning, including the home of Karti Chidambaram, which he shares with his father P Chidambaram, a Congress party politician whose most recent cabinet post was as finance minister from 2012 to 2014.

The CBI said its officers had also searched locations in Delhi, Mumbai and Gurgaon — the business hub to the south of the capital.

A statement from the bureau said: “[The] CBI is conducting searches at locations in Mumbai, Delhi, Gurugram [Gurgaon] and Chennai, including the residence of Karti Chidambaram, in connection with criminal misconduct in [the] grant of [an] FIPB approval.”

India has strict laws governing foreign investment into the country, with many transactions having to be cleared by the Foreign Investment Promotion Board. The government has announced it will abolish the FIPB in an attempt to encourage more foreign capital to flow into the country.

The CBI would not say which FIPB approval it was investigating.

However, in April the government’s enforcement directorate issued a notice demanding that Karti Chidambaram explain the sale to foreign investors of about Rs450m ($7m) worth of shares in a company called Advantage Strategic Consulting Private Limited. The directorate said Karti Chidambaram appeared to have been the ultimate beneficiary of that sale.

At the same time the organisation said it was investigating P Chidambaram for granting investment approval for the 2006 sale of Indian phone company Aircel to Malaysian telecoms group Maxis.

P Chidambaram told the Financial Times he did not believe it was the Aircel-Maxis merger that was being investigated, but another approval he had given while in government. He did not name the deal and said he had “no recollection of the details or facts” of that case.

In a statement, he added: “Every case was processed according to law and approval was granted or refused in accordance with the recommendations of the FIPB consisting of five secretaries of the government of India.

“The government, using the CBI and other agencies, is targeting my son and his friends. The government’s aim is to silence my voice and stop me from writing, as it has tried to do in the cases of leaders of opposition parties, journalists, columnists, NGOs and civil society organisations. All I will say is, I shall continue to speak and write.”

Mr Chidambaram is one of the opposition Congress party’s most prominent figures. He has been finance minister four times and also home affairs minister and is a member of the upper house of parliament. He has been an outspoken critic of the current Bharatiya Janata party government, led by prime minister Narendra Modi.

He has also been the target of litigation by Subramanian Swamy, the BJP politician, who is investigating allegations of corruption in the granting of 2G telecoms licences by the government in 2008.

Tom Vadakkan, a Congress party spokesman, told Reuters: “This is clearly a fishing expedition launched by the Modi government against Chidambaram.”

Halfway through what would be a nine-minute bidding war for a patinated bronze female head by Constantin Brancusi, paddle 281 shot above a standing-room-only crowd at Christie’s in midtown Manhattan.

The slow, steady auction for the ovoid sculpture of a sleeping woman’s face turned aggressive when, minutes in, Tobias Meyer, the former chief auctioneer for Sotheby’s, entered a $34m bid with a phone clutched to his ear. By the time the gavel came down, competition from five clients had sent the price of “La Muse endormie” to $51m — a record for the artist. With fees for Christie’s services, lot 32 fetched a cool $57.4m.

It marked a successful start to New York’s biannual contemporary and modern art auctions, after several years marred by thin supply and lacklustre bidding.

In total, the art broker tallied $258m of sales before premiums were added, well above the low end of its $207m-$307m presale estimate. With fees, Christie’s raised $289m with 78 per cent of the 55 lots sold — its most successful auction since 2010 and more than double the corresponding Impressionist and Modern Art sale last spring.

Guillaume Cerutti, the auctioneer’s chief executive, said it was a “fantastic start for the major collections that will be sold this week”.

“This will give confidence to the market,” he told the Financial Times after the auction. “Last year the consignors . . . were more cautious. They were waiting because of the economic conditions, the political conditions. This year we found the sellers were more confident . . . That’s what we witnessed tonight and it is what we hope will happen on Wednesday with our Contemporary sale.”

The solid showing by privately held Christie’s, which is controlled by French billionaire François Pinault, will calm nerves of collectors worried about the art market’s health after several trying years. To weather the market fragility, brokers have cut the guarantees offered to encourage consignors to put works up for sale, and have reduced staff.

Sotheby’s last week reported a narrower-than-expected first-quarter loss, and noted that the art market “is starting to show signs of strengthening”. Mr Cerutti of Christie’s added that it was “still a selective market”, with the group failing to sell 12 works on Monday.

Four works by Pablo Picasso sold throughout the night for a total of $82.5m with fees, including the oil on canvas “Femme assise, robe bleue” for $45m. The presale estimate, which excludes fees, was $35m-$50m. A Marc Chagall oil on canvas titled “Les trois cierges” realised a price of $14.6m, above the top end of its presale estimate, while a work from Fernand Léger sold for $11.4m with fees.

Mr Cerutti, who took the helm at the start of this year, joined Christie’s colleagues standing by a bank of phones during the night, taking bids from clients outside the room and engaging in lively bidding for an oil on board by Wassily Kandinsky. The piece — “Oben und links” — carried a presale estimate of $5m-$7m and sold for $7.2m at hammer price. With fees, it cost its buyer $8.3m.

The blockbuster listing of Ant Financial, the payments affiliate of Alibaba, has been put on ice until the end of next year at the earliest, according to bankers.

Market players have been counting on Ant, which runs China’s popular Alipay mobile payments service, to be the star in this year’s initial public offerings calendar. It was valued at $60bn in its last financing round in April 2016, more than twice that ascribed to Snap, the vanishing photo app, after its IPO in March.

According to one banker, Ant’s IPO has been pushed back to late 2018 or the first half of the following year because of the need to secure regulatory approval and to focus on building the business. Ant has been buying up assets overseas, including in India, South Korea and the US, where it is seeking to acquire MoneyGram.

“Ant would like to convert into an [overseas] shareholding, and it needs the blessing of government to do that,” the banker said. “And in a year of political uncertainty and manoeuvring, no one is making decisions.”

China’s Communist party will meet later this year to choose a new slate of top leaders for a once-in-five-years political transition.

In order to list overseas Ant would require a waiver from Beijing, said one mainland-based lawyer. Ant owes its current structure as a Chinese company to a controversial spin-off of Alipay by founder Jack Ma in 2011.

The move, which triggered a public spat with Yahoo, a big Alibaba shareholder, was necessitated by new Chinese government regulations on third-party payment services that meant Alipay had to change its ownership structure, Mr Ma said at the time.

While Ant would likely require a payments licence, or a waiver, if it is to be foreign held, that is a regulatory grey area and a few — much smaller — Chinese payments companies have been able to list overseas regardless.

Lawyers and bankers expect Beijing would grant a waiver, but caution that it could take time. “Once you get over that issue, it doesn’t need to be listed domestically and it is a question of which is the right market [Hong Kong or the US],” added another banker, who is looking for a listing in 18 to 24 months.

Ant Financial said it has no IPO timetable or location decision as of now.

In the meantime, Ant is busily stitching up and bedding down deals. Alibaba and Ant in March agreed to invest $177m for a controlling stake in the ecommerce unit of Indian tech group Paytm, having already poured more than $500m into Paytm, which is a similar platform to that run by Ant and which has more than 170m users.

Ant also ploughed $200m into Kakao Pay, a financial services arm of South Korean messaging app Kakao, and last month sweetened its $1.2bn bid for Moneygram to chase off rival suitor Euronet.

Bankers point out that it does not have “a burning need for capital”. It recently raised $3bn in debt overseas for foreign acquisitions.

Alipay was the subject of one of China’s most controversial corporate governance scandals, when in 2011 Mr Ma took it out of Alibaba and placed it under the direct control of himself and some associates.

Yahoo, at the time a 40 per cent shareholder in Alibaba, was among the main protesters. Mr Ma said he needed to make the step in order to satisfy new Chinese regulations on online finance.

Alibaba later settled with Yahoo and SoftBank, the Japanese technology group that is its other major shareholder. The agreement guarantees Alibaba 37.5 per cent of the total equity value of Alipay or a payment of at least $2bn and up to $6bn, if the spun-off company goes public or another “liquidity event” takes place.

It also requires Alipay to pay Alibaba royalties for software services and 49.9 per cent of its consolidated pre-tax income, and it must continue to service Taobao, the group’s consumer ecommerce unit and other group businesses, under preferential terms.

In addition to running Alipay, Ant offers a range of financial services. Its Yu’e Bao money market fund is the world’s biggest, with $165.6bn under management, based on first-quarter data.

Companies hoping to go public are often accused of over-promising would-be investors — especially those that listed in and around the dotcom bubble — but the pledge of one that listed 20 years ago on Monday seems almost positively euphemistic.

“Amazon.com intends to use technology to deliver an outstanding service offering and to achieve the significant economies inherent in the online store model,” the company said in its IPO paperwork.

“It was novel at the time, now it is accepted wisdom,” said Nicholas Colas, chief market strategist at Convergex. “They ended up being the pre-eminent disrupter of retail.”

Amazon shares, listed at $18 at the time, have produced a compound annual return of nearly 40 per cent since the initial public offering. That means, for example, that $100 invested in Amazon stock at the IPO would be nearly $64,000 today (the stock split three times, so one share at the IPO equals 12 shares now).

Up 63,990 per cent since its IPO, Amazon ranks as the best-performing US-listed IPO since 1995, according to Dealogic. For context, Netflix is fourth and Yahoo is seventh and the total return on the S&P 500 in the same period is about 300 per cent.

It was not always smooth sailing, though. Its shares sold off after the initial euphoria around the listing. Then, during the dotcom bust, adjusted for the stock splits, Amazon fell from a high of $113 in December of 1999 to a low of $5.51 in October of 2001.

Despite the meteoric rise and a fresh high on Monday, according to Bloomberg data, the stock has zero “sell” ratings, 8 “hold” ratings and 40 “buy” ratings.

Goldman Sachs, alongside Susquehanna Financial and Wedbush have given the stock a $1,250 price target — representing a 30.5 per cent premium to its closing price on Monday.

As online retailing has taken hold, Amazon has expanded and unseated traditional retailers. In 1996, Amazon had $15.8m of net sales. For 2016, that amount was $136bn.

In a sign of the changing times, Amazon’s market value now tops $450bn compared with about $230bn for Walmart, the largest brick and mortar retailer.

While Amazon began peddling books online, it has expanded its operations to boast a sizeable web services arm, Fresh, a service that has taken on traditional grocers and music and entertainment streaming services that aim to challenge Apple Music and Netflix. And Jeff Bezos’ ambitions have not ended there.

Amazon Studios, the company’s film and television programming arm, produced Manchester by the Sea — the first movie by a streaming service provider to land a best picture nomination.

Criminal hacking groups have repurposed a second classified cyber weapon stolen from US spies and have made it available on the so-called dark web after the success of the WannaCry attack that swept across the globe on Friday.

The hacking tool, developed by the US National Security Agency and codenamed EsteemAudit, has been adapted and is now available for criminal use, according to security analysts.

As with the NSA’s EternalBlue — the tool on which WannaCry was based — EsteemAudit exploits a vulnerability in older versions of Microsoft’s Windows software in the way in which networked machines communicate with each other.

Microsoft issued patches for vulnerable versions of its Windows software over the weekend — though experts warn many organisations have yet to apply them.

Intelligence and law-enforcement officials said they fear WannaCry may foreshadow a wave of similarly damaging attacks, as criminals and others race to make use of digital weapons that for years were only available to the most technologically sophisticated nation states.

At least a dozen other NSA tools are currently being discussed and worked on as the basis of potential new cyber weapons on hacking forums on the dark web, parts of the internet not accessible via normal search engines.

On Monday, the WannaCry attack, which hit 200,000 computers across 150 countries, appeared to slow. Europol, the European police agency, said the spread of the virus had stalled in Europe.

“We weren’t expecting to see it, but there has been a slight decline in the number of computers affected in Europe,” a Europol spokeswoman said. But she added: “We do not think this is the end of the crisis. The hackers have already evolved the malware, and will probably continue to do so.”

Six analysts and intelligence officials spoken to by the FT said they were beginning to piece together the origins of the WannaCry attack, although the perpetrators were still unknown.

They have identified three main sources: the US National Security Agency, which developed a number of digital espionage capabilities; a second cluster of unidentified hackers who are working to “weaponise” those tools following their leaking online; and a third group — WannaCry’s operators — who added the ransomware that demands a fee for unlocking infected computers.

“We believe they [WannaCry’s operators] are amateurs,” said Catalin Cosoi, chief security strategist at the cyber security firm Bitdefender. “They saw an opportunity and they took it.”

Mr Cosoi said a number of groups were very active on the dark web looking to turn leaked NSA tools into viable weapons.

Beginning last year, an anonymous group known as the Shadow Brokers, which Western intelligence officials believe to be a proxy for Russian intelligence services, began to leak NSA cyber weapons online.

However, Vladimir Putin, Russia’s president, on Monday castigated US intelligence agencies for the WannaCry outbreak.

Speaking in Beijing, Mr Putin cited comments by a top Microsoft executive that criticised the US government’s “stockpiling” of cyber weapons and denied any link with Russia.

“Microsoft said it directly: the initial source of this virus is the US’s security agencies, Russia’s got absolutely nothing to do with it,” Mr Putin said.

The attack hit the Russian interior ministry, mobile provider MegaFon, Sberbank, the state-owned financial group, as well as a number of other ministries and state-run companies, making Russia the country hardest hit by the attack, according to Kaspersky Lab, a Moscow-based cyber security company.

“There is a global ecosystem of cyber criminals and sophisticated hackers which are putting a lot of attack methodology into open-source,” said Ciaran Martin, director of the UK’s National Cyber Security Centre.

“It gets modified and reused and upgraded. The volume of open-source exploits and that ecosystem are getting bigger.” Mr Martin declined to comment on the specific origins of WannaCry or other tools being offered online.

Mr Martin urged organisations to apply patches to their software currently available from Microsoft — which will protect them from any attacks based on leaked NSA tools.

Additional reporting by Tim Bradshaw in San Francisco

French president Emmanuel Macron has appointed Edouard Philippe, a little-known centre-right politician, as his prime minister in an attempt to build a majority in parliament for his year-old centrist party.

Mr Macron’s poaching of Mr Philippe to lead his government was announced on the new president’s first full day in office. Less than a month before legislative elections, it is a new blow to the conservative Republican party, whose presidential nominee François Fillon was engulfed in an embezzlement scandal and failed to make it through to the election run-off.

France’s new president wants to accelerate the breakdown of the parties that have shared power in the country for the past four decades, hoping it will help him secure a majority for his Republique en Marche movement in legislative elections in June.

So far it has been easier for Mr Macron to attract politicians from the Socialist party — which was humiliated in the presidential election when Benoît Hamon took just 6.5 per cent of the vote — than to lure conservatives into his camp.

Despite Mr Fillon’s poor showing, the Republicans still hope to win a significant share of seats in the national legislature. They are counting on a network of locally elected officials and the political inexperience of Mr Macron’s party, whose parliamentary candidates are mostly political newcomers.

However, Mr Macron’s appointment of Mr Philippe may help him to peel away more moderate Republicans and deepen divisions in the centre-right party.

The new prime minister, 46, is mayor of Le Havre, the port in north-west France, as well as its representative in the National Assembly. Like Mr Macron, he is liberal on social issues and pro-business on the economy.

Mr Philippe is seen as close to Alain Juppé, the former centre-right prime minister who lost to Mr Fillon in primary elections last year. He was briefly a member of the Socialist party in his twenties.

A graduate of ENA, the elite university that grooms high-flying civil servants, Mr Philippe previously worked as a corporate lawyer for Debevoise & Plimpton and for nuclear group Areva as its chief of public affairs.

Mr Philippe wrote a weekly column in leftwing daily newspaper Libération during the presidential campaign. In one column a few days before this month’s presidential second round, he suggested that Mr Macron would “need to transgress” if he wanted to revolutionise French politics.

“His path will be narrow and risky. One has a hard time imagining the old system letting it happen,” Mr Philippe wrote.

Mr Philippe is expected to the name the members of his full government on Tuesday. His tenure at Matignon, the premier’s office, could prove short lived if Mr Macron’s REM party and its allies fail to win a solid majority on June 18.

Italy’s Atlantia has launched a bid to buy its Spanish rival Abertis in a deal that values the target at €16.3bn and would create one of the world’s largest toll road and infrastructure companies.

Atlantia announced its bid on Monday even though it did not have the full backing of the Abertis cornerstone shareholder Criteria, the Barcelona-based holding of the powerful Caixa foundation.

The offer is structured as an all-cash bid of €16.50 a share but also includes an equity option in the event that Criteria or other shareholders decide to own a stake in a combined group. This has been pegged at an exchange ratio of 0.697 per Abertis share, for up to 23.2 per cent of the total offer.

Multiple banks including Intesa Sanpaolo, Credit Suisse, UniCredit and others are lined up to provide finance for the offer.

One person involved added that there were still certain obstacles to getting Criteria’s full support and that a deal was not done yet.

The holding company said on Monday that it would “evaluate the friendly offer, with care and with time and without haste”.

People close to the deal cautioned that it could take Criteria some time – at least four weeks – to come up with a formal response to the offer. However, the share swap part of the proposal appears to be tailored precisely to the needs of Criteria as it is just enough to cover its 23 per cent stake. Anyone taking up the share swap offer would not be able to sell their stake until February 2019 – a condition that may only appeal to a long-term strategic investor like Criteria.

Atlantia’s offer is also structured to avoid some of the pitfalls that traditionally befall cross-country deals. Most importantly, Abertis would remain a listed company in Spain with its separate headquarters and management. Atlantia is also planning to transfer its Latin American assets to the Spanish group.

Shares in Abertis have steadily crept higher since Atlantia revealed last month that it was considering an offer for the company. Madrid-listed Abertis shares closed last week at €16.45, giving it a market value of €14.95bn. Shares in the company have risen 32 per cent in the past six months. Atlantia has a market value of almost €20bn.

A deal would create one of the largest toll road and airport operators in the world, with an important presence in Italy, Spain, France, Brazil and Chile.

A combination of the two groups would also help tackle the key weaknesses of both Atlantia and of Abertis. Though larger than its Spanish rival, Atlantia’s assets are heavily concentrated in its Italian home market. Buying Abertis would give the group a much more diversified and balanced portfolio.

Abertis, on the other hand, has struggled in recent years to win new business, and has seen the average lifespan of its toll road concessions fall steadily. Atlantia has no such worries. According to people close to the deal, a combined group would also be in a much stronger position to bid for large but costly toll road concessions in markets such as the US in coming years.

The fate of the Atlantia bid is now in the hands of Abertis shareholders, the most important of which by far is Criteria, a holding that long played a key role in steering the infrastructure group. Salvador Alemany, chairman of Abertis, is a trustee of the Caixa foundation. Francisco Reynés, the Abertis chief executive, is a former managing director of the Criteria holding.

Criteria is thought to be open to a tie-up, but has neither the need nor the desire to turn its stake into cash. The Barcelona holding would prefer to swap its current stake in Abertis for a stake in the combined group.

The Atlantia bid is already the second attempt to link the main Spanish and Italian toll road group. Abertis and its Italian rival came close to a €25bn merger more than a decade ago, but the deal was ultimately scrapped because of political resistance in Italy.

Atlantia, which is controlled by the Benetton family through its investment vehicle Edizione, operates 5,000km of toll motorways in Italy, Brazil, Chile, India and Poland. It also manages Fiumicino and Ciampino airports in Italy along with three airports in southern France.

Abertis manages more than 8,000km of toll roads in 14 countries, and is the leading operator in Spain, Brazil and Chile. The company reported earnings of €796m and sales of €4.94bn for 2016.

Oil prices jumped after the energy ministers from Saudi Arabia and Russia said they backed extending an Opec-led agreement to cut output until March 2018.

Saudi energy minister Khalid al-Falih and his Russian counterpart Alexander Novak met on Monday in Beijing and discussed oil output policy. Russia is the world’s biggest oil producer, while Saudi Arabia is the biggest exporter.

The two ministers said in a joint statement that they agreed to do “whatever it takes” to reduce global oil stockpiles to their five-year average levels, underscoring the challenge they have faced in shrinking excess inventories and bringing the oil market into balance.

Brent crude, the global benchmark, rose 1.4 per cent to $51.56 a barrel while West Texas Intermediate, the US marker, gained 1.5 per cent to $48.55.

In the statement the two energy ministers emphasised their commitment to “stabilising the global oil market, reducing volatility, and ensuring the balancing of supply and demand in the near and long term”.

They recommended that the next round of reductions should be on the same terms as the first deal, when global producers agreed to cut almost 1.8m barrels a day for the first six months of 2017.

Opec ministers are due at the end of this month to meet in Vienna to discuss the extension of output curbs, seeking to reach agreement among all participating members inside and outside the cartel. While the ministers said on Monday that there was a consensus, the meeting on May 25 is when a final decision will be made on the nine-month extension.

The ministers said the existing supply curbs helped to accelerate inventory declines in industrialised nations in April and May and had driven a drop in oil at sea on tankers.

Even so, Opec’s latest monthly forecasts showed output from the US and other countries outside the cartel had surpassed expectations this year, offsetting curbs from some of the world’s biggest producers, keeping global oil inventories stubbornly high and maintaining pressure on prices.

Opec revised up output growth from US shale and others outside the group by 58 per cent to almost 1m barrels in 2017, and said the world will require just 31.9m b/d of the cartel’s crude on average this year.

This means that demand for Opec’s oil is only 200,000 b/d higher than current output levels, according to the data from consultants and energy analysts submitted to the group, despite deep output cuts that are at least six times as large.

Global energy agencies, including Opec’s own research arm, still believe the oil market will rebalance in the second half of 2017, assuming production does not rise further. Libya and Nigeria, which have been exempt from output cuts and whose production is set to recover in coming months after disruptions, present a risk to the existing agreement.

Singapore, one of the most urbanised nations on earth, is making land available for agriculture for the first time in decades for farmers to come up with high-tech ways of improving the city-state’s food security.

About 60 hectares of land will be released for farming from August, in a move authorities describe as providing a “buffer” against disruption in the supply chain.

Singapore is the third most densely populated jurisdiction in the world, with only the Chinese territory of Macau and the Mediterranean principality of Monaco boasting more people per square kilometre.

The south-east Asian city-state imports more than 90 per cent of the food needed to cater for its 5.6m inhabitants, and outbreaks of disease among overseas suppliers are quickly felt in price rises at markets. 

Singapore’s government is also concerned about the impact of climate change on catches of wild fish, a central part of the local diet. 

“Given our limited space, we will not be able to produce all the food we need,” Lawrence Wong, Singapore’s minister for national development, said in a blog post. “However, new farming technologies allow us to significantly boost our production levels.” 

Farmers bidding for the new land will be encouraged to outline their plans to raise productivity as well as competing on price. 

Land for agriculture is scarce in Singapore and it can be hard to find skilled agricultural labour but farmers benefit from government funding for research and development.

Local farms produce about a quarter of the eggs consumed in Singapore, 8 per cent of the vegetables, and a similar percentage of the fish.

Eric Ng, chief executive of Apollo Aquaculture, a business rearing grouper and shrimp in Singapore and Brunei, said he planned to push vertical fish farming to greater heights if he can obtain a portion of the newly released land. 

Mr Ng said: “We have a three-tier farming system. For the new land we are looking at building a six-tier farming system, so efficiency is increased and our carbon footprint is reduced.”

Eugene Tan, a political analyst at Singapore Management University, likened the farming plan to Singapore’s efforts to achieve self-reliance in water through rainwater catchment, recycling and desalination. Water technology developed in Singapore has been exported globally.

“The food security gains won’t be significant — we’re not talking about a quantum leap that will let us be self-sufficient in eggs, for example,” Mr Tan said.

“But if we can pioneer technology in the farming sector, this could eventually be exported, particularly to countries where land commands a premium.”

While food security has increased in importance globally, the availability of cheap and nutritious meals at hawker centres is particularly central to Singaporean life. 

The hawker stalls that serve up traditional favourites such as char kway teow (stir-fried rice cake strips) and Hokkien mee (a noodle dish), are regarded as a safety net for the poorest as well as a place where all levels of society meet. Politicians are conscious of the need to keep a lid on prices at these stalls.

Singapore’s government recently supported a vast farming venture in north-east China, which is intended to provide a reliable supply of pork and other staples. 

The Jilin farming project, managed by a public-private partnership, covers 1,450 sq km — an area twice the size of Singapore.

Chancellor Angela Merkel’s conservatives won a surprise victory on Sunday in regional elections in Germany’s most populous state, giving Europe’s most powerful leader a big boost in the run-up to national elections in September. 

The Christian Democrats took control of North Rhine-Westphalia from their Social Democrat rivals, dealing a heavy blow to SPD leader Martin Schulz as he bids to unseat Ms Merkel in Berlin. 

Meanwhile, the anti-immigration Alternative for Germany party failed to achieve its target, leaving the populist right in Europe with another electoral setback following National Front leader Marine Le Pen’s defeat in France last week. 

According to estimates based on partial results, the CDU won 33 per cent in Sunday’s vote, well up on the 26 per cent they scored in the last election in 2012. Campaigning in a traditional party stronghold, the SPD saw its vote plunge from 39 per cent to 31.5 per cent, its worst-ever result. 

“We had a following wind from Berlin,” said Hermann Gröhe, the CDU health minister and a close ally of the chancellor. “There was no following wind [for the SPD] from Mr Schulz.” 

Mr Schulz tried to rally his supporters, urging them to put the defeat behind them and look forward to the national election. “For me personally, it’s a difficult day,” he said.

The CDU’s victory came amid a late rally, in which Ms Merkel’s reputation as Europe’s stability anchor is widely thought to have played a central role. As late as March, the SPD seemed set for a comfortable victory after Mr Schulz, the former European Parliament head, took over the party in January and galvanised support. 

But doubts began to set in for SPD officials in North Rhine-Westphalia, an important region that includes the Ruhr industrial belt, after the Social Democrats lost votes in Saarland in western Germany and in Schleswig-Holstein in the north. The CDU used Ms Merkel as the focus of its campaign and criticised the local SPD-led government for alleged failures on crime, education, ageing infrastructure, and reviving the economy after the decline of coal and steel. 

Hannelore Kraft, the SPD’s popular chief minister for North Rhine-Westphalia, resigned as regional Social Democrat leader. Analysts said she had outshone Armin Laschet, her lacklustre CDU challenger, in the campaign, but could not overcome the advantage the CDU drew from Ms Merkel. 

Mr Laschet said: “I am glad to have achieved a good result with pro-European politics against anti-European populists.”

The CDU now has three possible options in forming a ruling local coalition: a “Grand Coalition” with the SPD, as there is in the national government in Berlin; an administration formed with the liberal Free Democrats; or a more complicated three-way combination with the Greens, the SPD’s existing coalition partners, and the FDP.

The FDP took 12.6 per cent of the vote and the Greens 6.3 per cent. ​

The turnout was sharply up at 65.5 per cent as a greater number of mainstream voters went to the polls than five years ago, stirred by concerns about populist successes, including the AfD’s emergence, as well as the Brexit vote and the election of Donald Trump in the US. 

The AfD, which had been recording as much as 11 per cent in opinion polls in the region and was aiming to win 10 per cent, secured only 7.7 per cent. With the waning of the refugee crisis, which saw 1.3m asylum-seekers arrive in Germany in 2015-16, the dispute-torn party is struggling to retain support. However, it cleared the 5 per cent hurdle for entering the regional assembly and will now be represented in 13 of Germany’s 16 states.

Despite slipping in opinion polls, it remains on track to become the first far-right party since 1945 to enter the national parliament. In the latest national survey published by the Emnid agency on Saturday, it scored 8 per cent. The CDU was on 37 per cent, well ahead of the SPD on 27 per cent, leaving Mr Schulz a mountain to climb.

Businesses must brace for further cyber attacks this week on a potentially “significant scale”, British intelligence officials warned on Sunday, less than 48 hours after the debilitating WannaCry infection swept across the world.

Current data show more than 1.3m computer systems are still vulnerable to infection by WannaCry, which has paralysed hospitals, disrupted transport networks and immobilised businesses, according to cyber security analysts.

So far, 200,000 computers across 150 countries are known to have been infected in the first wave of the WannaCry cyber attack, Europol said on Sunday. “The recent attack is at an unprecedented level and will require a complex international investigation to identify the culprits,” the European police agency added.

Intelligence agencies in Europe and the US have spent the weekend warning large companies and organisations that the threat from the ransomware — a category of malicious software that encrypts infected machines’ hard drives and demands payment to release the data again — may escalate.

“We are aware of attempts to attack other UK centres beyond the health service,” Ciaran Martin, director of the National Cyber Security Centre, an arm of the electronic intelligence agency GCHQ, told the Financial Times.

He said there was no evidence WannaCry had been updated by its creators to address the element in its coding that halted its spread late on Friday. Officials believe WannaCry is the creation of a criminal group.

“With the National Crime Agency we have an around-the-clock effort to work out who is responsible,” Mr Martin said. “We have a number of leads but we can’t comment on them.”

Anthony Ferrante, a former director for Cyber Incident Response at the US National Security Council, thought the cyber attack was not yet over. “We could see some activity on Monday morning when people show up for work,” he said.

The scale of the incident has prompted international co-ordination from governments and law enforcement.

Mr Ferrante, managing director at FTI Consulting’s forensics and litigation unit, said the US government was taking the threat extremely seriously.

US President Donald Trump ordered emergency White House meetings on Friday and Saturday to identify the culprits and the threat posed by the cyber attack, a White House official said.

Mr Trump directed Tom Bossert, his homeland security adviser, to convene the meetings, which were attended by senior security staff from agencies including the FBI and National Security Agency.

The list of organisations hit by WannaCry has steadily lengthened: alongside Britain’s National Health Service, victims include the Deutsche Bahn, FedEx, Russia’s ministry of the interior, Renault, Telefónica and China National Petroleum Corp.

Russia, Ukraine, India and Taiwan were the most seriously affected countries, according to cyber security company Kaspersky Lab.

More on the cyber attack

● Cyber Attack Survival guide
● FT View: The WannaCry attack is a wake-up call
● Timeline of a hack: How WannaCry’s secret weapon spread
● What is WannaCry and how can it be stopped?
● Ransomware’s scope means authorities have to act
● Security experts dash to contain ransomware attack

Despite urgent appeals for organisations to address the critical Windows software security vulnerability exploited by WannaCry, many still have not done so.

“We must change our approach,” said Julian King, the EU’s security commissioner. “We all need to take responsibility for cyber security. We can’t just leave it to someone else to take care of.”

According to cyber intelligence company Digital Shadows, more than 1.3m computers connected to the internet are vulnerable.

“It’s only a matter of time before cyber criminals evolve the WannaCry ransomware malware to become even more virulent,” said Becky Pinkard, vice-president of service delivery and intelligence at Digital Shadows.

WannaCry’s potency is based on a cyber weapon known as EternalBlue, developed by the US National Security Agency. It was stolen and leaked online last year by a group known as the Shadow Brokers, believed by western intelligence to be connected to Russia’s spy agencies.

EternalBlue, built by the NSA to exploit the then-unknown Windows software loophole, was used as a platform by WannaCry’s operators to supercharge their ransomware. The virus spread across organisations via any file-sharing protocols, such as drop boxes for documents or databases.

The spread of WannaCry was halted early on Friday thanks to the efforts of a British cyber security researcher, who works under the online pseudonym Malwaretech. He identified and activated an effective “kill switch” coded into WannaCry by its creators.

But he warned that the kill switch could easily be written out of a repurposed version of WannaCry.

A senior British security official said the ransomware component of WannaCry could easily be swapped. “The payload could have simply been a command to wipe the hard drive of the machine entirely,” he said. “That would have been devastating and it still could be.”

Additional reporting by Jim Brunsden in Brussels and Barney Jopson in Washington

Emmanuel Macron’s election as president of France received few more rapturous welcomes than that given by Sylvie Goulard, a liberal French politician in the European Parliament and ally of the 39-year-old new head of state. “Finally! Finally, Europe and France reconciled!” Ms Goulard enthused. “What a symbol — a young president, focused on the future, entering the Louvre of the kings of France to the sound of the European hymn.”

The official reaction in Poland was distinctly more tepid. In a letter to Mr Macron, President Andrzej Duda expressed the hope for a Franco-Polish dialogue “built on principles of mutual respect for equal states and free peoples”. Less than a week earlier, Mr Duda had told Polish television in even frostier language that, should he win, Mr Macron would need to work hard to regain Poland’s trust in France.

The contrast between the warmth with which western Europe greeted Mr Macron’s victory and the more muted response in parts of central and eastern Europe underscores a widening gap between many of the older EU states in the west and newer ones in the east.

There is no neat line that divides Europe down the middle, but clashing national interests, values and visions of the future create the risk that some countries in each half of the continent will drift in opposite directions, endangering the EU’s unity over the long run.

The frictions between west and east are part of two emerging trends that disturb the European politicians who still invoke the objective of a “Europe whole and free” outlined by former US president George HW Bush in May 1989, as the cold war drew to a close.

Rebel inside the EU: 1. Viktor Orban

A conservative nationalist who has served as prime minister of Hungary since 2010 and who has proclaimed the creation of the EU’s first ‘illiberal democracy’. He has been criticised in Brussels for policies that crack down on the courts, the media, academia and civil society.

The other trend concerns Albania, Macedonia, Serbia and other Balkan countries that aspire to EU membership. They remain a long way from entry because of an expanding list of woes, including occasionally violent ethnic tensions, political instability, weak state administrations, economic fragility, corruption and organised crime.

Few experts on the Balkans think that a repeat of the 1990s wars in former Yugoslavia is likely any time soon. However, Dimitar Bechev, a University of North Carolina fellow, cautions that trouble could lie ahead in “the west’s growing disenchantment in the area, coupled with the region’s stagnation and democratic backsliding”. Such developments, if unchecked, may condemn the Balkan states to a marooned existence outside the EU, prey to Russian influence and tempted into nationalist projects aimed at redrawing borders.

Accession doubts

Darkening clouds over the Balkans and the EU’s west-east differences are related phenomena. Each reflects frustration among western European political elites with the near-paralysis over the past 10 years of the EU integration process. Inclined to pile much blame on alleged troublemakers and laggards among the EU’s eastern states, the westerners display an unwillingness to compound their difficulties by speeding up membership for the candidate states of south-eastern Europe.

Rebel inside the EU: 2. Jaroslaw Kaczynski

A former prime minister, the 67-year-old leader of Poland’s ruling Law and Justice party is the driving force in the rightwing resurgence in the country over the past year. His political outlook mixes traditional Catholic values, Euroscepticism and mistrust of Germany and Russia.

Kersti Kaljulaid, president of Estonia, which will assume the EU’s six-month rotating presidency in July, is among those in the former Soviet bloc who are eager to uphold the EU’s unity and regard eastern enlargement as an epochal success. “All those who joined are better off, and so are almost all of the original member states,” she told the Financial Times.

Mr Macron has promoted a strongly pro-Europe platform during the French presidential elections, but internal tensions within the EU also rose to the surface during his campaign.

Poland’s conservative nationalist government was angered when he criticised its adherence to EU standards of democracy and the rule of law. He even compared Jaroslaw Kaczynski, Poland’s de facto leader, with Vladimir Putin, the authoritarian Russian president who is a bogeyman to most Poles.

Mr Macron vowed punitive EU-wide action, within three months of taking office, against Poland and Hungary. The government of Viktor Orban, prime minister, who prides himself on building an “illiberal democracy” in Hungary, drew fire from Mr Macron and other western Europeans because it had just passed a law that threatened the closure of the Budapest-based Central European University, a bastion of regional academic independence.

The unifier: Kersti Kaljulaid

A former member of the European Court of Auditors, she became president of Estonia last October. Conscious that her small country borders Russia, Kaljulaid stresses the need for EU and Nato unity as the guarantee of Estonia’s independence.

Thomas Nord, a Bundestag deputy who chairs the German-Polish parliamentary group, contends that Mr Macron’s warning of EU sanctions is probably hollow. “All you can do under EU treaties is to suspend a country’s voting rights, but this would be like dropping an atom bomb. And what would be the impact on the nationalists if you took this step? It might backfire and benefit them,” he told the FT.

Other politicians in Berlin say that, despite its dismay at the Warsaw government’s behaviour, Germany will strive to avoid punishing Poland. More than 70 years after the Nazis’ second world war atrocities, modern German leaders still feel a moral responsibility towards the Polish nation. Moreover, as Germany’s largest eastern neighbour and the anchor of central and eastern Europe, Poland deserves German patience and understanding, they say.

Yet Mr Macron was giving voice to widespread impatience in Belgium, France and like-minded western states with easterners such as Bulgaria, Hungary, Poland and Romania. To varying degrees, the latter group stand accused in western eyes of dabbling in populist nationalism, treating core EU values in a high-handed manner, being riddled with corruption and offering minimal co-operation on Europe’s refugee and migrant crisis. Paul Magnette, premier of Belgium’s Wallonia region, struck this chord in February when he demanded that Brexit — Britain’s exit from the EU — should be followed by “Polxit, Hungxit, Romaxit and Bulgxit”.

Fear of a two-tier EU

Now, seizing on the opportunity presented by the pro-EU Mr Macron’s election victory, a western-led group of states may be gearing up for a burst of integration among themselves. If most former communist countries that entered the EU between 2004 and 2013 decline to join them, they will go ahead anyway. The grounds for such a step were laid out in a March European Commission white paper, which suggested defence, internal security, taxation and social policy as areas where those countries that want to co-operate more closely should be free to do so.

The Serbian hardliner: Aleksandar Vucic

Elected president of Serbia last month, Vucic is a former radical nationalist who has since expressed shame over Bosnian Serb war crimes. He often plays the Russia card as he moves Serbia towards the EU.

However, more ambitious ideas, such as Mr Macron’s call for a eurozone finance minister, may be empty fantasies for the present. Jean-Claude Juncker, the commission’s president, observed on May 9 — Europe Day — that a supranational finance minister would take the bloc into “a very dangerous forest”, because the proposal touches on sensitive questions of national budgets, democracy and accountability.

He might have added that German support for such French initiatives is certain to be conditional on Mr Macron’s success in implementing his campaign promises of pro-business measures, labour market reforms and an overhaul of the public sector. Still, Herman Van Rompuy, the former EU president, says that if Mr Macron makes progress, Germany should develop joint plans after its September parliamentary elections.

Mr Van Rompuy favours a Franco-German move to permit more room for public investment and social spending in return for more strictly applied fiscal rules on other areas of expenditure. Viewed from non-eurozone capitals, even such limited initiatives aimed at strengthening the euro area contain the potential to separate the west from much of the east — especially because Brexit will deprive economically less advanced, non-euro countries of their strongest spokesman.

Fear of a two-tier EU explains why leaders of the Visegrad four — the Czech Republic, Hungary, Poland and Slovakia — met in March to demand “fair treatment” for all member states, warn against “discrimination based on the currency” and propose more national controls over the EU’s political and legislative processes. Yet, only four days after the Visegrad summit, the leaders of France, Germany, Italy and Spain endorsed a “multispeed” Europe.

The former fighter: Hashim Thaci

A former guerrilla commander and prime minister, he was elected president of Kosovo by the parliament last year. He has warned that the failure of Kosovo to enter the EU will boost support for the creation of a ‘Greater Albania’.

“A Europe of different speeds is necessary, otherwise we will probably get stuck,” said Angela Merkel, Germany’s chancellor, at the meeting in Versailles. “If Europe gets stuck and doesn’t develop further, then this work of peace may run into danger faster than one might think.”

Poland, which will be the fifth-largest EU state after Brexit, was conspicuous by its absence from Versailles. On European defence, however, it is a prominent voice. Like other central and eastern Europeans who once languished under Moscow’s overlordship and now belong to Nato, the Poles are in no hurry to leave the US security umbrella for the sake of some hazy western European ideal of self-reliance in defence.

“It will not be easy to revise the military priorities of the EU. Some European countries, ie the eastern ones, are actually more loyal to Washington than to Brussels,” says Beda Romano, an Italian commentator on Europe.

Support for membership

In the Balkans, the fundamental questions are what appetite remains in western European capitals for another round of EU enlargement, and what will happen to south-eastern Europe if it turns out that the bloc’s expansion ended with the admission in 2013 of Croatia. In a region that once lay across the Habsburg-Ottoman frontier, the danger for states on the old Ottoman side is that the indefinite postponement of EU entry will cause public support for EU membership to wane, already fragile democratic institutions to crumble and political tensions to increase — as has happened in Turkey.

The EU keeps alive, just about, the formal procedures of EU entry for Balkan states. Montenegro has opened 26 of the 35 “chapters”, or policy areas, required to qualify for admission. But it has completed only two. One year ago, an EU association accord for Kosovo came into effect, putting the former Serbian province on the road to membership. However, Kosovo cannot join the EU until the bloc’s governments are satisfied that it has achieved full reconciliation with Serbia. Moreover, five EU states refuse to recognise Kosovo as a sovereign state, nine years after its declaration of independence.

The region’s pivotal state is Serbia, where Aleksandar Vucic was elected on April 2 as president. The EU appears to regard Mr Vucic as a useful strongman, who deserves support because he is sincere about Serbia’s European future and will limit Russian influence in the Balkans.

“Serbia is on the path towards the EU,” says David McAllister, a German member of the European Parliament.

If so, it is a long journey, with no guaranteed date for its end. It promises to be an even longer path for Bosnia-Herzegovina, a weak state where sections of the political class manipulate ethnic rivalries as artfully as their predecessors did a generation ago.

The Balkan troubles are simmering just as western Europe is experiencing a resurgence of hope about its future as a result of Mr Macron’s election. But modern European history holds cruel lessons. It was in February 1992 that EU leaders signed the Maastricht treaty, optimistically launching what they saw as the next big stride towards European unity. It was in April 1992 that the Bosnian war broke out, costing more than 100,000 lives.

North Korea’s conducted its latest weapons test on Sunday, presenting South Korea’s Moon Jae-in with his first foreign policy challenge and raising fears that Pyongyang may have developed a new kind of missile.

Japan’s defence minister said the missile had reached an altitude of 2,000km on its 700km journey, potentially indicating a new type of rocket.

David Wright, a physicist and missile expert, wrote on the All Things Nuclear blog that had the missile been fired on a lower trajectory, its could have flown as far as 4,500km, and putting the US territory of Guam within range.

World leaders, including US President Donald Trump and Japan’s Prime Minister Shinzo Abe, were quick to condemn the test — Pyongyang’s 10th so far this year.

“With the missile impacting so close to Russian soil — in fact, closer to Russia than Japan — the president cannot imagine that Russia is pleased,” the White House said in a statement. “North Korea has been a flagrant menace for far too long . . . Let this latest provocation serve as a call for all nations to implement far stronger sanctions.”

Pyongyang’s latest missile test comes amid a relative easing of tensions after Mr Trump said a fortnight ago he would be “honoured” to meet North Korean leader Kim Jong Un. His comments came weeks after the US president sparked fears of imminent conflict by saying the US was prepared to act unilaterally to “solve” the North Korean problem.

Mr Moon criticised the launch but said his government would not close the door on dialogue with Pyongyang. The new South Korean leader has pledged a dual-track approach of increasing sanctions but also engaging with Mr Kim’s regime.

The North appeared to reciprocate on Saturday, with senior diplomat Choe Son Hui telling reporters in Beijing that Pyongyang would “hold dialogue under right conditions” with the US administration.

Mr Moon’s election heralds a broader reconfiguration of the region’s geopolitics.

A diplomatic freeze between China and South Korea over a US missile shield, whose radar Beijing fears will be used to spy on its military developments, has shown signs of thawing. A top South Korean envoy travelled to China over the weekend for the first high-level government interaction in months, in a visit Seoul said had been requested by Chinese president Xi Jinping.

“[This] can be a starting point for smoothing over many of the crises in the region,” said Song Min-soon, a former South Korean foreign minister. “It is quite natural for any new South Korean president to want to have warm relations with China and this does not mean sacrificing our alliance with the US.”

The visit followed talks between Mr Moon and Mr Xi on the deployment of the Terminal High Altitude Area Defence platform, or Thaad.

Moon discusses Pyongyang with Xi
Asean dragged into US-North Korea spat
FT View: South Korea votes for a fresh face and reform

In the months since Thaad was announced, Beijing has ratcheted up economic pressure on Seoul, banning its tour groups from visiting South Korea and shuttering Korean companies operating in China.

On the campaign trail last month, Mr Moon said he would reconsider the Thaad installation, suggesting due process had not been followed in its deployment.

Experts, however, say it will be difficult for Mr Moon to pull the deployment, which may undermine any attempt at rebuilding ties with China.

“[Mr Moon] has acted proactively but I’m afraid he won’t be able to meet Chinese expectations,” said Zhao Tong, an expert on China-Korea relations at the Carnegie-Tsinghua Center for Global Policy in Beijing. “China expects South Korea to completely cancel the deployment.”

Mr Moon’s ruling Democratic party on Friday said it would push for a parliamentary hearing on the controversial shield in order to address “national suspicions”.

“We have to address national suspicions regarding the procedural legitimacy of the Thaad deployment, the illegal installation of Thaad equipment and a possible secret deal [with the US over cost-sharing],” the lawmakers said in a statement.

Additional reporting by Kang Buseong in Seoul, Charles Clover in Beijing and Robin Harding in Tokyo

Emmanuel Macron will formally become French president on Sunday and will immediately be put to the test by challenges from choosing a prime minister to pressing Germany to back a tougher EU stance on trade and investment.

Mr Macron, a 39-year-old Europhile pro-business centrist, is taking over a country on edge after an unpopular Socialist presidency and a rollercoaster campaign marked by the qualification of the far-right National Front candidate for the runoff round.

His election has been an extraordinary feat. Mr Macron, who had never been elected before, set up his party a year ago, stepped down from government nine months ago and announced his presidential bid six months ago. He was unknown to the public until three years ago, when Mr Hollande made him his economy minister.

Campaigning on supply-side reforms and optimism with his party, La République En Marche, which he insists is neither on the right nor on the left, Mr Macron precipitated the meltdown of the established parties from the centre-right and centre-left. In liberal, pro-EU circles, he has emerged as Europe’s bulwark against the populist tide that has brought Brexit in the UK and Donald Trump to power in the US.

As is tradition, Mr Macron will be greeted at the Elysée Palace on Sunday morning by the outgoing president — his unpopular former mentor, François Hollande. The two will spend half an hour in a private meeting at which Mr Macron will receive the access codes to the French nuclear arsenal.

He will then be awarded the Grand Cross, the highest insignia of the Legion of Honour, before delivering a speech to guests. After a military ceremony and a 21-gun salute, the new president will head to the Arc de Triomphe for a short public ceremony.

Mr Macron faces the immediate challenge of appointing a prime minister ahead of critical legislative elections in June that will put his disruptive effect on French politics to the test.

Names that have circulated for the job include Edouard Philippe, a moderate centre-right Republican and mayor of the western city of Le Havre, as well as Richard Ferrand, secretary-general of La République En Marche, a former Socialist MP and early Macron supporter.

The former would unsettle the centre-right Republican party, in disarray after the ill-fated campaign of François Fillon, but which hopes to recover by winning a large block in the National Assembly, the country’s lower house. An appointment could come as early as Sunday evening, with the cabinet expected to be disclosed on Tuesday.

On Wednesday Mr Macron’s party will reveal the full list of candidates for parliamentary elections, possibly including some figures of the centre-right. Last week the party disclosed 428 names out of 577, mostly political novices and half women.

Despite intense political manoeuvring at home, Mr Macron will fly to Berlin to meet Chancellor Angela Merkel on Monday, as has become the tradition for newly elected French leaders.

There, he intends to outline his plan to push the EU to adopt a tougher stance on trade and foreign investment, as he seeks to win over domestic critics calling for greater protectionism.

Mr Macron will urge the German leader to move quickly to strengthen EU anti-dumping measures and tighten control of foreign investment in strategic sectors, aides have said.

It is not often that you can halt a global hacking attack for a tenner. But when you do, you spend your money fast.

Although Friday’s attack infected computers in almost 100 countries, it did not go on to spread further, thanks to an eagle-eyed UK security researcher who spotted a “kill switch” in the malware code and used it to stop the virus and collect data on infections in real time.

The switch was included in the malicious software probably as an “emergency brake” in case the creator wanted to prevent its further spread if it malfunctioned.

The mechanism works as follows: when WannaCry infects a computer, it makes a server request to a particular dotcom address, in this case a long, nonsensical string of characters. If it is not able to reach the domain, it locks files in and spreads; if it connects — it shuts itself down.

The 22-year-old tweeting as @malwaretechblog was reading through the malicious software when he spotted the brake and went on to check it online. He realised that the person behind the hack had not purchased the domain before launching the attack.

“I saw it wasn’t registered and thought, ‘I think I’ll have that,’” he is reported to have said. He bought the domain for $10.69 and used it to collect real-time data about the attacks happening across the globe. He was helped by Darien Huss, a researcher at Proofpoint, a cyber security firm.

The registration came too late to spare Europe and Asia, but it delayed the spread of the malware in the US, where many organisations managed to patch their systems before being hit. It is the only effective way to prevent the spread of the bug.

Once ransomware such as WannaCry infects a device, it is too late to prevent the lockdown.

Although the attack has been stifled, security experts say the hackers are likely to hit again, as many computers remain at risk. Devices remain vulnerable if they lack a security update issued in March by Microsoft. The patch labelled “critical” fixes a vulnerability in Windows operating system.

The unprecedented scale of the attack, believed to be the biggest of its kind, prompted Microsoft to swiftly change its policy and offer the fix free of charge for older Windows systems such as 2001’s Windows XP, which are still used by small businesses and millions of individuals.

Donald Trump said on Saturday that he could announce a new director of the Federal Bureau of Investigation within a week as the administration considers a shortlist of at least four candidates.

At the weekend attorney-general Jeff Sessions and his deputy Rod Rosenstein were due to interview candidates to replace James Comey, who was ousted by Mr Trump in a move critics said was meant to frustrate an FBI probe of ties between the Trump campaign and Russia.

“I think the process is going to go quickly,” Mr Trump told reporters en route to an address at Liberty University on Saturday, saying it was possible a decision could be announced before he travels to Saudi Arabia on Friday.

The candidates include the bureau’s current deputy director Andy McCabe; Republican senator John Cornyn of Texas; Alice Fisher, a white-collar defence attorney and former Department of Justice official; and Michael Garcia, a New York state appeals court judge.

Without mentioning any names, Mr Trump said: “Almost all of [the candidates] are very well known. They’ve been vetted over their lifetime, essentially. But very well known, highly respected, really talented people. And that’s what we want for the FBI.”

The job requires Senate confirmation.

Mr Trump did not mention the Comey firing in his first university commencement address, but he drew parallels with his bid for the White House as he urged students to “challenge entrenched interests and failed power structures”.

On Friday Mr Trump appeared to threaten Mr Comey with the release of tapes of their private conversations as he lashed out at the man he fired as FBI director in a flurry of angry morning tweets.

The US president warned the former agency chief against leaking to the press amid conflicting accounts of the events surrounding his dismissal this week.

“James Comey better hope there are no ‘tapes’ of our conversations before he starts leaking to the press!” the president tweeted.

A massive global cyber attack engulfed one in five NHS trusts as some hospitals continued to ask all but emergency patients to stay away amid uncertainty over whether some non-urgent operations and appointments would go ahead next week.

However, UK government officials suggested no key data had been lost from the ransomware attacks.

A total of 48 trusts were hit by the cyber attack on Friday afternoon, forcing them to cancel and delay treatment.

Amber Rudd, home secretary, emerged from chairing a meeting of the UK government’s high level emergency committee, Cobra, on Saturday to say that all but six were now running normally.

Hospitals and GP surgeries across the UK were affected when it was hit by WannaCry, one of the fastest-spreading and potentially damaging cyber attacks seen to date. But health service insiders said on Saturday the attack had been “indiscriminate and not particularly sophisticated”, with administrative systems affected as much as clinical ones.

NHS Digital added: “We have received no reports of patient data being compromised.”

One NHS official said there were two issues: the first was how to get the computer systems up and running again, which might be done “relatively quickly”. The second, which would prove more complex, was how to reschedule operations and outpatient appointments cancelled amid the chaos of Friday.

We have received no reports of patient data being compromised

Technically, given the data had been backed up, it was “not particularly difficult to unravel” the consequences of the malware, added the health service source. A bigger problem, however, was the availability of sufficient trained staff, given that most NHS IT teams were relatively small and over-stretched.

The bigger challenge was how to find new slots for patients denied treatment yesterday. Given how high waiting lists already were, there would be “a lot of ramifications” which could see people having to wait up to six weeks longer, with a knock-on effect on all waiting times in the NHS, added the official.

Parts of the health service still use a now-obsolete Windows operating system, although NHS Digital said on Saturday “the vast majority” of staff were working on contemporary systems and “the number of devices within the NHS that reportedly use XP has fallen to 4.7 per cent, with this figure continuing to decrease”.

It is understood that Microsoft was working today to ensure that patches to repair breaches were being made available to all trusts that needed them.

Some health leaders believe that the attack may have bolstered the service’s case for additional resources in the Autumn Budget, specifically to modernise outdated technology.

Philip Hammond, UK chancellor, has already committed to an unspecified amount of further infrastructure investment for the health service in his next financial statement. Insiders argued what had happened would increase the political pressure on Mr Hammond to act to improve cyber security. “[He] has already promised a capital settlement for us and I’d be surprised if there wasn’t a bigger IT aspect to that [now],” said one.

However, it was not simply a matter of cash, but of the NHS having sufficient numbers of people with the necessary digital expertise. “It is not just a money issue but a skills and capacity issue,” said one official.

When hospitals are so overstretched they are turning patients away, it’s hard to find the time and resources for cyber security

The NHS was among the first victims of the WannaCry malware, which has now been linked with more than 50,000 malware infections in almost 100 countries, according to security software company Avast.

WannaCry uses a cyber weapon known as Eternal Blue that was developed by US spies to supercharge an existing form of criminal malware.

Ms Rudd had earlier said the identify of the attackers was being sought, and that no patient data had been stolen.

She told the BBC Today programme that the virus had not been targeted at the NHS, saying the attack “feels random in terms of where it’s gone to and where it’s been opened”.

“Windows XP is not a good platform for keeping your data as secure as the modern ones, because you can’t download the effective patches and anti-virus software for defending against viruses.” she said.

Nearly 70 years after he produced Hong Kong’s first plastic duck, toy industry veteran LT Lam’s factories in China now churn out everything from Transformers to Play-Doh.

But with costs rising in China and the industry fragmenting because of technological advances and changing consumer tastes, the 93-year-old worries that Hong Kong could lose its decades-long role at the heart of the global toy industry.

“We started with nothing but our 10 fingers and our fighting spirit,” he says. “I think we still have some good opportunities for the next five to 10 years, but the contract manufacturing business is declining.”

Generations of children grew up in the 1970s and 1980s with “made in Hong Kong” toys, from Star Wars and GI Joe action figures to Rubiks Cubes and water pistols.

The manufacturing shifted to neighbouring Guangdong province in mainland China, where wages were substantially lower, from the early 1980s onwards.

But Hong Kongers such as Mr Lam and Francis Choi, known as the “king of toys”, still control the Chinese factories that produce much of the output for global industry leaders such as Hasbro and Mattel.

Dominic Tam, president of the Toy Manufacturers Association of Hong Kong, estimates that about two-thirds of the world’s toys are made by Hong Kong companies operating in mainland China and employing hundreds of thousands of people.

The global toy industry is worth roughly $90bn, with sales in the biggest market, the US, of $20bn last year, according to NPD, a data analysis company.

Although sales have been growing at a rate of about 3 per cent a year since 2011, traditional Hong Kong toymakers such as Mr Lam’s Forward Winsome and Mr Choi’s Early Light Industrial remain under constant pressure.

While low-cost Chinese rivals are snapping at their heels, their customers are squeezing profit margins and demanding more stringent safety and labour standards after a series of product recalls and worker maltreatment scandals in the past decade.

“Hong Kong companies have a reputation for strong business ethics and our international partners trust us to respect their intellectual property rights,” says John Tong, a factory owner and chairman of the Hong Kong Toys Council, another industry lobby group. “But there’s tremendous price pressure and the Chinese will catch up eventually.”

Hong Kong toymakers are also suffering because of the increasingly short life cycle of products, mirroring the rise of the fast fashion sold by Zara and H&M. About a third of US toys are licensed products linked to hit Hollywood films, television shows or computer games.

But while older brands such as Star Wars and Transformers have maintained their buzz for decades, newer ones such as Frozen, Angry Birds and Finding Dory have a much shorter shelf life.

“The popular licences rarely last longer than a few years because there’s too much choice,” says Mr Tong. “Frozen had a good two-year run but Pokémon only lived for three to six months and didn’t drive that many product sales.”

A case in point is Playmates, a Hong Kong-listed company that makes the Teenage Mutant Ninja Turtles action figures. It sales have soared and plummeted over recent years, depending on the movie release schedule.

The increasing use of smartphones and tablets represents another big challenge to the industry, especially for companies targeting those over six years of age, who are spending more time with electronic products.

Some Hong Kong companies such as VTech are responding by producing smart toys, for example simple laptops and smartwatches designed to promote early learning.

More traditional manufacturers such as Mr Lam, who still carries the mould of his first plastic duck with him, are sticking to what they know.

“There are several hundred million children in China and they can’t all play computer games,” says Mr Lam, who is launching a new version of his yellow plastic duck aimed at the Chinese market.

But Mr Tong says the only sustainable future for Hong Kong toymakers is for them to move into branding and marketing rather than just contract manufacturing, following in the footsteps of the Japanese companies that dominated global toy exports before the 1970s.

“These Japanese companies now have great influence on culture worldwide,” he says. “In future, we can’t just produce for Lego, Mattel and Hasbro, we have to evolve.”

Europe’s investment community has barely had time to breathe a sigh of relief following Emmanuel Macron’s victory in the French presidential elections before starting to fret about other latent threats to the eurozone.

Some investors have hailed the election — in which Mr Macron, a pro-EU liberal defeated Marine Le Pen, the Eurosceptic rightwing candidate — as a sign that Europe’s economic recovery remains on track.

This follows the defeat of anti-EU candidates in both the Netherlands and Austria over the past six months, which also alleviated fears that a rise in populism across Europe could spark a break-up of the eurozone.

But many of Europe’s largest investors are now turning their attention to another risk to their portfolios that is rapidly gaining momentum: the rise of Italy’s Five Star Movement, and its potential to upend the economic bloc.

The concern is that Five Star, the anti-establishment party set up in 2009 by Beppe Grillo, the Italian comedian and blogger, could win the country’s next election, which is due to take place within 12 months.

Mujtaba Rahman, managing director at Eurasia Group, a consultancy that advises large investors on political risks, says: “The biggest risk in Europe is Italy. The euro area is not working and as long as it fails to deliver growth, populism will continue to grow.

“[Italy has] corruption problems, fiscal problems, banking sector problems, a refugee crisis, the government in power has not been elected and the prime minister has no political mandate. This is a recipe for a big crisis in Italy, which we are very concerned about. Our view for now is Five Star will win the election next year.”

Recent polls have indicated Five Star is the most popular party in Italy, with the support of at least 32 per cent of the electorate, compared with 26 per cent for PD, the ruling centre-left democratic party.

Although most large investors recognise that Five Star’s political agenda remains unclear, they are concerned by the movement’s promise to hold a referendum on euro membership.

Philip Poole, global head of research at Deutsche Asset Management, Europe’s third-largest investment house, says: “Has the risk [to eurozone stability] entirely passed? It hasn’t, because the Italian elections are coming up, and Five Star is doing extremely well in the polls. Here you have the potential for an anti-EU coalition to be formed. The market has not really focused on this yet.”

Nicholette MacDonald-Brown, European equities fund manager at Schroders, the UK’s largest listed fund company, adds: “In political terms, [Italy] has to be the next big risk on the horizon.”

With public discontent on the rise about the country’s economic difficulties, banking crisis and high unemployment rate, there is widespread concern that the Italian population will choose to abandon the single currency, triggering an unprecedented political and economic crisis across the eurozone.

Such fears are particularly acute given that Italian public support for the euro is low compared with elsewhere in Europe. Just 53 per cent of the population supports the currency, according to a European Commission study carried out in the autumn of last year.

A strategist at one of the world’s largest hedge fund companies, speaking on condition on anonymity, says: “My base case in Italy is that some form of populist movement will be in power after the next election. Industrial production completely collapsed under the euro — it has been absolutely butchered. This has led to the slow rotting of a historically great economy. Italians know it — they’re not stupid.

Industrial production completely collapsed under the euro — it has been absolutely butchered. This has led to the slow rotting of a historically great economy

“A high-probability scenario is that Five Star gets in, they call a referendum on the euro within six months, and it results in a euro exit from Italy. That’s the beginning of the end of the euro. The implications for financial markets are absolutely profound. How do you reprice all of those assets?”

Other investors are hopeful that Matteo Renzi, Italy’s former prime minister who was forced to resign last December after losing a referendum on constitutional reforms, will claw back support. He successfully recaptured the leadership of the PD earlier this month.

Mr Renzi won more than 70 per cent of the ballots cast by 2m party supporters, alleviating concerns that the referendum loss had left him discredited.

Ewen Cameron Watt, chief investment strategist at BlackRock, the world’s largest asset manager, is optimistic that Italians will opt to continue using the single currency when given the choice. “What we have seen so far with the euro — whether with Cyprus or Greece — is that people choose the currency over sovereignty as their wealth is denominated in the currency,” he says.

“As Italy is so much more important to the eurozone project, [any] referendum [on the euro] will cause market palpitations. One would be an idiot not to recognise that. But so far people have voted for their pocket books, not for their ideals.”

Others are less convinced. Nicholas Brooks, head of economic research at Intermediate Capital Group, the UK-listed asset manager, says that according to polls, just under 50 per cent of Italians support parties with Eurosceptic platforms. “Italy is a crucial risk,” he says.

Monica Defend, head of asset allocation research at Pioneer, one of Italy’s largest fund companies, adds that Mr Renzi’s political comeback is unlikely to curb the groundswell of support for Five Star. The electoral system in Italy has also set the bar lower than elsewhere in Europe for an extremist party to come to power, she says.

Ms Defend, whose team oversees €106bn of assets, says: “It seems reasonable to [assume that] the PD and the Five Star Movement will be neck and neck [in the election next year]. If we went into an election today, [the current system] would strongly favour the Five Star Movement.

“What we would really like to see is a government that will endorse the eurozone project further.”

Amid growing nervousness about Italy’s political prospects, many of Europe’s largest investment houses are avoiding the country altogether. Pioneer’s asset allocation team and the absolute return team at Jupiter, the UK fund company, have zero exposure to Italy.

Lucy MacDonald, chief investment officer for global equities at Allianz Global Investors, the German fund house that oversees €480bn of assets, similarly says her investment team has no Italian holdings.

“Investors are absolutely right to focus on Italy. It has weak growth, a very weak banking system and a very difficult political backdrop,” she says, adding that these concerns are affecting asset prices elsewhere in Europe.

“The overall impact of instability in a country of that size you cannot ignore. We need to look at that when assessing euro-area strength or weakness. Although the underlying economic picture [across Europe] is stronger, the existence of this threat in a large part of the euro area will keep a bit of a ceiling on [eurozone asset prices].”

Deutsche Asset Management has an overweight position on Italian government debt, although Mr Poole says this holding is likely to be “reappraised” as the election edges nearer.

“The election is still potentially a year away, so it is not something we would use at this stage to position funds. But a Five Star victory would clearly be negative [for eurozone asset prices]. For sure, if that happened, it would be very negative for peripheral bond spreads, for eurozone equities, and in particular for the euro.”

The EU has protested strongly against a proposed extension of a US ban on laptops on transatlantic flights from some of Europe’s biggest airports, warning that it could pose a risk to flight safety.

EU officials have also called on Washington to be more open in sharing security information that would justify enlarging the scope of the ban that the US authorities imposed earlier on flights to US cities from certain airports in the Middle East.

In a conference call with John Kelly, US secretary for homeland security, the EU’s transport and migration commissioners warned of the “potential safety implications of putting a large number of electronic devices in the aircraft hold” if they were not allowed in the cabin.

European regulators are concerned that placing hundreds of lithium-ion batteries in an enclosed space such as an aircraft hold could pose a serious fire risk.

Under UN rules, passengers are not allowed spare lithium-ion batteries in the hold after flight safety experts found that when packed tightly together, they can self-ignite and burn. Overheated batteries can also give off fumes and explode on board.

The European Aviation Safety Agency advises airlines that large electronic items such as laptops “should preferably be carried in the passenger cabin, on the person or in the carry-on baggage” in order to mitigate the risk of fire.

One European aviation official said that moving a laptop into the hold would make “no difference” if a bomb were hidden inside it, adding “cabin luggage is scanned more rigorously than hold luggage — some hold bags are not scanned at all”.

Dimitris Avramopoulos, European commissioner for migration and justice, told Mr Kelly “that the threat affects the EU and the US in the same way, so information should be shared and that the responses should be common”.

Mr Avramopoulos’s comments reflect deep disquiet in Brussels over a lack of information from Washington. In the absence of formal notification from the Trump administration, European officials have been relying only on press reports and are not being briefed on the scope or timing of the initiative.

EU officials were particularly keen to understand why the US was insisting on an extension of the ban when European agencies see no imminent threat at hand.

A commission spokesman said the talks were “constructive” and added: “No ban on electronic devices or any other decision has been announced.”

European airlines that operate flights to the US have already begun discreetly preparing for ban, however, according to one European aviation official. The ban would, in theory, also apply to US airlines that fly to many US cities from European airports, whereas they do not operate direct flights from the Middle East.

In March, the Trump administration imposed a ban on electronic devices larger than a mobile phone on all flights from 10 Middle Eastern hub airports, amid fears that a bomb could be hidden in a laptop and detonated on board. The UK followed suit, but left off some of the airports on the US list while adding others.

On Thursday, the commission wrote to senior US transport officials demanding an explanation for the proposed extension of the ban and clarification of what they are proposing.

In a letter to the US departments of homeland security and transportation, Brussels insisted that “information concerning the threat to civil aviation that concerns EU airports be made accessible in order to develop a shared assessment of risks and a common response which is robust, proportionate and in the interests of our common security”.

The talks also come as EU-US relations on the issue of transatlantic travel are strained by Washington’s refusal to include five EU countries in its visa waiver scheme. MEPs have called on the commission to scrap the visa waiver enjoyed by US citizens in the EU in retaliation.

The three beefy men sharing a laugh looked like old friends, not geopolitical adversaries. A smiling Donald Trump welcomed Russia’s foreign minister Sergei Lavrov and its US ambassador Sergey Kislyak to the Oval Office on Wednesday, just a day after the president had fired the man investigating Moscow’s role in helping him enter the White House.

The extraordinary scene was just the latest sign that Mr Trump has little respect for Washington’s norms or, for that matter, the prerogatives of other government institutions. Americans caught their only glimpse of the friendly, albeit somewhat surreal, tableau from photographs supplied by Tass, Russia’s state-run news service.

A week that began with the president basking in a modest healthcare victory in the House of Representatives and anticipating progress on tax reform ended with him contradicting his aides’ explanation for the sudden dismissal of FBI director James Comey. Worse, Mr Trump acknowledged in a televised interview that he had in mind “this Russia thing” when he decided to oust the FBI chief.

For his critics, the president’s breezy flirtation with the obstruction of justice only intensified calls for the appointment of a special prosecutor to investigate Russian meddling in last year’s presidential election. Those swelled on Friday as Mr Trump threatened the release of White House “tapes” — real or imagined — in a tweet warning Mr Comey not to speak against him. The series of bizarre episodes left Washington unnerved.

“We haven’t had a president in a long time, maybe ever, who’s presented this kind of frontal assault on so many institutions,” says Pete Wehner, who worked in three Republican administrations. “I always believed a Trump presidency would represent a stress test of our institutions . . . That’s happening now.”

The Republican-dominated Congress so far is trying hard to avoid the test. Mr Trump is unlikely to face a special prosecutor unless Republican voters desert him and embolden the party’s politicians to defect. Despite sagging overall support, the president retains the affection of 82 per cent of his own party, according to the latest Quinnipiac University poll.

Still, Mr Trump this week again demonstrated his peculiar talent for upending his own agenda. On Capitol Hill, Republican congressional aides worry that the president’s conduct may further slow the legislative agenda, in part by poisoning the well of bipartisan co-operation, already nearly bone dry. The day after Mr Comey’s dismissal, a Senate committee abruptly postponed a mark-up of a routine bill to reauthorise user fees that fund the Food and Drug Administration. Still ahead lies the distraction of confirmation hearings for Mr Comey’s successor.

“Trump has a hold on the Republican party, but it’s a weak hold,” says Mr Wehner. “This is not a political colossus.”

The Republicans, who control the presidency and both houses of Congress for the first time since 2006, were already facing an uphill battle in advancing their legislative agenda. While the House passed a healthcare overhaul this month, prompting a jubilant — if premature — Rose Garden celebration, the measure faces uncertain prospects in the Senate, which could take months to act.

“Even before Comey was fired, it looked like the Democrats were not going to make any effort to engage in any bipartisan work on the health bill; now they have even less incentive,” says Eric Edelman, who served under George W Bush. “Politically the timing of this was very ill-considered.”

The upshot of the chaotic efforts to repeal and replace former President Barack Obama’s Affordable Care Act could be a further delay to tax reform, which many GOP lawmakers see as critical to their 2018 re-election hopes.

Spooked by Mr Trump’s impulsive dismissal of the FBI director, some Republicans are beginning to tiptoe away from the president. Moments after NBC News aired footage of Mr Trump disparaging Mr Comey as a “showboat” and “grandstander” who deserved to be axed, a senior Republican senator on Thursday bluntly contradicted the commander-in-chief.

Mr Comey was “one of the most ethical, upright, straightforward individuals I’ve had the opportunity to work with”, says Richard Burr, chairman of the Senate Intelligence Committee, who is leading one of the congressional investigations into alleged collusion between the Trump campaign and Russia.

The controversy engulfing the administration is certain to erode Mr Trump’s already fragile position. Just 36 per cent of registered voters approve of his performance in the latest Quinnipiac University poll, while 58 per cent disapprove. Mr Trump’s white working-class base is beginning to defect. Less than a month ago, white voters who lacked a college degree backed the president by a 57 to 38 per cent margin. Today, they are almost evenly split.

Likewise, there are signs Mr Trump’s shaky performance may cost the Republicans control of the House in next year’s midterm elections and open the door to more aggressive congressional investigations. Voters favour a Democratic House by 54 per cent to 38 per cent — a 16-point gap that Quinnipiac says is the largest it has ever recorded on that question.

Those worrying whether US institutions are up to the Trump challenge will scrutinise his choice to replace Mr Comey at the FBI. Already, in just over 100 days in office, Mr Trump has disparaged “so-called” judges; mocked the free press as “fake news” and suggested rewriting the Senate’s parliamentary rules to make executive action easier.

Some parts of the 18th-century political system that Americans claim is the best in the world are performing better than others. The judiciary, the executive’s coequal, has acted as an implacable opponent of Mr Trump’s occasionally lawless urges. Federal judges in several courts halted his ill-prepared travel ban on citizens from seven Muslim-majority nations and forced a rewrite, which remains tied up in litigation.

The press has produced aggressive coverage of the administration. Michael Flynn, the national security adviser, was fired in February after the Washington Post disclosed that he had misled White House colleagues about private talks with a Russian diplomat over a potential easing of US sanctions.

Mr Kislyak, who Mr Flynn conversed with before Mr Trump took office, was the Russian diplomat the president welcomed on Wednesday. A White House press release of the meeting did not mention Mr Kislyak’s presence.

Earlier this year, US intelligence agencies said Russian President Vladimir Putin had personally orchestrated a campaign of cyber attacks designed to tilt the election towards Mr Trump.

The president’s treatment of Mr Comey, who learned of his firing from a TV news report while visiting an FBI office in Los Angeles, was seen as humiliating by the bureau’s rank-and-file. Mr Trump claimed that Mr Comey had told him on three occasions that he was not under investigation, a statement that the director’s allies say is untrue.

Likewise, White House deputy press secretary Sarah Huckabee Sanders’ claim that Mr Comey was fired after losing the confidence of his agents irked many at the FBI, including some who criticised his handling of the saga over Hillary Clinton’s emails. “The younger guys loved Comey,” says a retired agent. “Higher up into the ranks, you started to get a bit more of a divide. But the vast majority liked and respected Comey.”

Though privately Republicans are exasperated by the president’s antics, party stalwarts say his disruptive energy will prove healthy.

“The American system will stand up to the test fine,” says Trent Lott, the Republican former Senate majority leader. “Washington and the institutions here need to get shaken up a little.”

But Mr Trump’s take-no-prisoners style has embroiled him in sequential conflict with US intelligence agencies, members of his own party and the nation’s chief law enforcement agency.

For now, however, only a handful of Republicans are openly critical of the president, including senators John McCain, Lindsey Graham, Ben Sasse and Jeff Flake. Mr Lott, who spent 34 years in Congress before becoming a Washington lobbyist, says the antidote to Mr Trump’s wobbly poll numbers is legislative success. If the Republicans somehow muscle into law bills on healthcare, tax reform and infrastructure spending, the president’s woes may melt away. “But if they don’t get all of those, they’ll be in trouble,” he says.

To Americans of a certain age, Washington’s atmosphere recalls the Watergate crisis that made Richard Nixon the first man to resign the presidency. Laurence Tribe, a professor of constitutional law at Harvard Law School and a former counsellor to Mr Obama, says the first article of the impeachment against Mr Nixon accused him of obstructing justice.

Most Republicans in Washington have only loose ties to Mr Trump, a populist who executed a hostile takeover of the party. If his standing deteriorates, more Republicans could embrace the idea of a special counsel to investigate the Russia links.

“The ability of the system to dust itself off and move forward cannot be taken for granted,” says Mr Tribe. “It is a dangerous time.”

Donald Trump capped a week of Watergate flashbacks in Washington on Friday, as he appeared to channel the ghost of Richard Nixon by threatening his recently sacked FBI director with the release of “tapes” of their private conversation.

In a series of irate tweets, Mr Trump warned the former agency chief against leaking to the press amid conflicting accounts of events leading to the director’s sacking this week. The tweets followed a New York Times report — denied by the White House — that Mr Comey had told associates the president asked him to pledge his loyalty over dinner in the White House.

“James Comey better hope there are no ‘tapes’ of our conversations before he starts leaking to the press!” the president tweeted. He also took aim at the US media, threatening to end the daily White House press briefings, a mainstay of the modern US political era.

The outcry over Mr Trump’s sacking of Mr Comey has prompted comparisons to Nixon’s decision to fire the special prosecutor investigating the Watergate break in. Yet no one has done more to feed the parallels than Mr Trump himself. Earlier this week, the president invited reporters to witness his Oval Office meeting with Nixon White House veteran Henry Kissinger one day after Mr Comey’s firing.

His reference on Friday to “tapes” invited confusion over whether Mr Trump was implying he surreptitiously recorded conversations with White House visitors — a practice that was believed to have stopped with Nixon, whose own secret recordings served as key evidence in the events that ultimately led to his resignation.

Mr Trump’s outburst came amid growing scrutiny over the White House’s account of why Mr Comey was sacked. On Thursday, the president for the first time linked the decision with the FBI’s investigation into possible links between the Trump campaign and a Russian effort to influence the 2016 election in the candidate’s favour.

With questions over Russia ties dominating the headlines again, the White House released a letter from the president’s lawyers, which said that their review of 10 years’ worth of Mr Trump’s tax returns showed no income from Russian sources, “with a few exceptions”.

Legal experts have warned that Mr Trump’s tweets at Mr Comey could come back to haunt him if the FBI director’s sacking is examined in a court of law.

In recent months, Mr Trump has repeatedly accused his predecessor of “wiretapping” him during the 2016 election, something he has claimed was unethical if not illegal.

“Obviously, President Trump is confused,” John Dean, Nixon’s former White House counsel, wrote on Twitter. “He is the one who must hope there are no tapes. Honest people don’t have problems being taped.”

While other US leaders have shied away from Nixon parallels given the politician’s fateful end, Mr Trump appears to have embraced the comparison, in some ways taking up Nixon’s mantle, the Nixon scholar Douglas Brinkley said.

Mr Trump met Nixon in 1989 when the two men attended a gala together in Houston and the New York real estate scion gave the former president a ride back on his plane to New York. The current and former president share a fondness for folksy, salty language — with similarly negative views of the Washington elite and media.

“He’s long been Nixon inspired,” Mr Brinkley said of the president. “During his seminal years, Nixon was a powerful man.”

Hackers responsible for the wave of cyber attacks that struck organisations across the globe on Friday from the UK’s National Health Service to European telecoms company Telefónica used tools stolen from the US National Security Agency, the Financial Times has learnt.

A tool known as “eternal blue”, developed by US spies was used by the hackers to make an existing form of ransomware known as WannaCry more virulent, three senior cyber security analysts said. Their analysis was confirmed by western security officials who are still scrambling to contain the attack.

Their reading of events was confirmed by western security officials who are still scrambling to contain the spread of the attack.

Ransomware is a form of malware which locks victims out of their own computers by encrypting files on them and demands a ransom, typically payable in the untraceable digital currency bitcoin, in order to return access. Infection is almost always made by email.

The latest version of WannaCry spread laterally through the computer networks of infected organisations, however.

The NSA’s eternal blue exploit allows the malware to spread through file-sharing protocols set up across organisations, many of which span the globe.

Security officials in the UK, which has been among the countries worst hit, currently believe the attacks are the work of a criminal group, though they are still working to assess the full nature of the attack.

The UK’s National Cyber Security Centre, an arm of GCHQ, has been put into a state of high alert. The speed and virulence of the infection has caught many by surprise.

NHS hospitals across the UK were hit by the attack with medical staff confronted with messages demanding payment to unlock access to data.

The UK was one of several countries, including Spain and Portugal, where computer systems in various sectors were infiltrated by the same ransomware.

NHS Digital, the arm of the UK health service co-ordinating a response, said “a number” of NHS organisations had been affected by a ransomware attack, “which is affecting a number of different organisations”.

It said that there was no evidence that patient data had been accessed but was continuing to assess the damage done by the hack.

Downing Street said that the prime minister was being kept updated and that Jeremy Hunt, the health secretary, was being briefed by the NCSC.

Dominic Grieve, chair of the intelligence and security committee, told the Financial Times that the government was not complacent about the threat from hackers. “The government has already allocated a colossal amount of resources to this . . . but you can’t have 100 per cent guarantee that you cannot be hacked into.”

In October, Ben Gummer, Cabinet Office minister, warned that “large quantities of sensitive data” held by the NHS and government were being targeted by hackers — with the potential to disrupt Britain’s energy, water and transport networks.

The same or a similar virus was used in a large-scale attack in Spain on Friday that hit companies including Telefónica, the country’s main telecoms provider. Telefónica said that it had suffered a “cyber security incident” affecting the personal computers of “some” employees.

It is not known if the attacks in Spain and on the NHS are connected. In Portugal, a spokesman for the police cyber crime unit told local media that “large-scale” ransomware attacks had hit a number of Portuguese firms, particularly communication operators.

There have been unverified reports of cyber attacks in several other countries, including Russia.

It was scary — we had no idea what was going on. We didn’t have access to our notes or patient medical records. We couldn’t request blood tests or ultrasounds

Barts Hospital, in central London, confirmed that it was among the hospitals to have been hit and said it had been forced to cancel routine appointments and divert ambulances to neighbouring hospitals as the “major IT disruption” took hold. It asked the public “to use other NHS services wherever possible” and said that the IT breakdown was causing delays at all the hospitals within the trust.

“We have activated our major incident plan to make sure we can maintain the safety and welfare of patients,” it added. Technicians were turning away patients seeking blood tests and the electronic sign that determines the queue was switched off. “It’s because of the computers,” one staffer told a confused woman.

One person said that managers at all levels were in meetings to assess the attacks.

Patrick Ward, a salesman from Dorset, was poised to have open-heart surgery at Bart’s on Friday when the computers went down. Mr Ward said he had been prepared for surgery when, just before 2pm, “the consultant came and said there’s been a cyber attack and they could no longer do the operation”.

His doctor only performs the surgery for Mr Ward’s condition, which is not life threatening, once a week, on Fridays. Mr Ward said he was told to expect a call on Monday with more information. “I’ve got to wait now.”

A doctor working in a hospital in east London affected by the attack said staff had “turned everything off and we are sitting back and going on seeing patients as we normally do”. Staff had reverted to paper records, he added.

East and North Hertfordshire NHS Trust posted a statement on its website to say it was “currently experiencing significant problems with our IT and telephone network which we’re trying to resolve as soon as possible”. Hospital trusts and GP groups in Lancashire were also reporting problems.

NHS Digital said it was “working closely with the National Cyber Security Centre, the Department of Health and NHS England to support affected organisations and to recommend appropriate mitigations”.

Vanessa Sandhu, a GP in Braintree, Essex, said: “We got a call from the CCG [Clinical Commissioning Groups] saying there had been a security breach. We all had to shut down our computers and unplug all cables from the walls.

“It was scary — we had no idea what was going on. We didn’t have access to our notes or patient medical records. We couldn’t request blood tests or ultrasounds. We had to disconnect the surgery telephones so we couldn’t communicate with other doctors or patients. We tried to see the patients in the building, but everyone else we told to go home.

“We’ve had to close the surgery for the day. Some hospitals have had to shut down so it’s going to be absolute carnage in A&E if you can’t do emergency tests or get blood results for those most in need.”

In February, a report into the NHS and cyber crime found that 34 per cent of trusts across England, Scotland and Wales had suffered ransomware attacks during the previous 18 months. Scottish trusts were the worst hit, with almost 60 per cent being attacked, while 79 English trusts, more than 33 per cent, had been affected since June 2015.

Attacks on at least seven of the trusts, including dozens of hospitals, had been successful, which means that data had been locked up by criminals.

In November, a ransomware attack on the Northern Lincolnshire and Goole Trust brought down the systems of three British hospitals, forcing doctors to use pen and paper rather than computers, and leading to the cancellation of hundreds of routine operations and outpatient appointments. The attack lasted five days.

Jonathan Ashworth, shadow health secretary, said the attack was “a real worry for patients” and called on the government to set out what had happened and what measures ministers were taking to reduce the threat.

additional reporting by Jim Pickard and Anjli Raval

Donald Trump appeared to threaten James Comey with the release of “tapes” of their private conversations as he lashed out at the man he fired as FBI director in a flurry of angry morning tweets.

The US president warned the former agency chief against leaking to the press amid conflicting accounts of the events surrounding his explosive sacking this week.

“James Comey better hope there are no ‘tapes’ of our conversations before he starts leaking to the press!” the president tweeted.

Mr Trump’s outburst came amid growing scrutiny over the White House’s account of how Mr Comey was sacked — particularly its initial claim that Mr Trump had only fired him on the recommendation of his new deputy attorney-general Rod Rosenstein, a claim that Mr Trump laid out in his initial letter of dismissal.

There are differing accounts of a private dinner between the men in January. The New York Times reported that Mr Comey had told associates the president asked him twice at the dinner to pledge loyalty to him. The White House disputed the account and Mr Trump told NBC the dinner was “very nice”.

At two separate press briefings this week, White House deputy press secretary Sarah Huckabee Sanders insisted that Mr Trump had decided to dismiss Mr Comey because Mr Rosenstein had urged him to do so.

James Comey better hope there are no ‘tapes’ of our conversations before he starts leaking to the press!

Yet on Thursday, she was contradicted by the president himself who, in an interview with NBC News, said he had been planning to fire Mr Comey regardless of Mr Rosenstein’s recommendation.

“I was going to fire regardless of [his] recommendation,” Mr Trump told NBC. The president also for the first time linked the decision to terminate with Mr Comey with the FBI’s investigation into possible links between the Trump campaign and a Russian effort to influence the 2016 election in their candidate’s favour.

“In fact, when I decided to just do it, I said to myself, I said, ‘You know, this Russia thing with Trump and Russia is a made up story, it’s an excuse by the Democrats for having lost an election that they should have won.”

On Friday, Mr Trump defended his press staff and suggested that media briefings should be cancelled. “As a very active President with lots of things happening, it is not possible for my surrogates to stand at podium with perfect accuracy!” Mr Trump tweeted.

“Maybe the best thing to do would be to cancel all future ‘press briefings’ and hand out written responses for the sake of accuracy???”

The yield on Chinese five-year government bonds hit its highest since 2014 on Friday, as tight liquidity and a regulatory crackdown on leveraged investment caused a rarely seen inversion of the yield curve.

Bond yields, which move inversely to price, have been on the rise since last October as the People’s Bank of China moves to discourage the use of borrowed money for bond investment. 

The bond shakeout has accelerated since March, as regulators issued a series of directives to curb financial risk. 

Lending ties among financial institutions have grown increasingly complex in China, with lenders issuing certificates of deposit to some banks to buy high-yielding wealth management products from others. Issuers of such products then entrust the funds to third-party asset managers such as trusts, insurers and fund companies. 

“New regulation is focusing on curbing new off-balance-sheet investments, while letting existing portfolios roll off slowly,” said Hao Hong, head of research at Bocom International in Hong Kong. “It’s going to be a long and painful process, and the market seems to have underestimated the authority’s resolve this time.” 

Despite rising bond yields, analysts expect credit to the real economy to keep growing strongly, as authorities are committed to meeting the government’s target for gross domestic product. Rather than cutting off corporate and household debt, regulators are mainly focused on curtailing leverage within the financial system. 

Market participants say uncertainty about the impact of regulation has sparked excessive caution among some banks. In April, the China Banking Regulatory Commission ordered lenders to conduct reviews of “irregularities” in their interbank business but did not issue specific rules on what was allowed, according to an executive at a foreign bank in Shanghai. 

“Trends in the real economy don’t support a large increase in yields,” Ming Ming, chief fixed-income analyst at Citic Securities in Beijing, wrote on Friday. “There are some irrational factors contributing to recent interest-rate movements.”

In addition to tighter regulation, the central bank has also grown stingier about supplying the banking system with fresh funds. The People’s Bank of China drained a net Rmb120bn ($17.4bn) from money markets through open market operations this week, bringing the total net drain through this mechanism in 2017 to Rmb925bn.

On Thursday, the benchmark yield on five-year Chinese government bonds rose above the 10-year yield, the first such inversion since data from the National Interbank Funding Center began in 2010. In general, longer-dated bonds carry higher yields, in part because a longer investment timeline multiplies the probability of default or other risk events.

But on Friday, the PBoC softened its stance somewhat, injecting Rmb459bn into the market through its Medium-term Lending Facility (MLF). This injection will amount to a net injection of cash even after the Rmb230bn in MLF loans that matured last week and an additional Rmb180bn due to mature next week.

The five-year yield on government bonds hit 3.74 per cent on Friday afternoon, the highest level since December 2014 and above the 3.66 per cent level for 10-year bonds.

Analysts say that yield-curve inversion mainly reflects differing supply-demand dynamics demand for five- and 10-year tenors. The rising cost of short-term funding and regulators’ emphasis on deleveraging has pushed banks to unload shorter-dated assets. 

But demand for 10-year bonds remains strong for matching with longer-term liabilities. Some bond issuers have also cancelled scheduled bond issues in recent months, reducing the supply of long-dated issues.

“The yield-curve inversion won’t persist long-term. The market will undergo a gradual recovery process,” said Xu Hanfei, fixed-income analyst at China Merchants Securities.

Additional reporting by Nan Ma

Twitter: @gabewildau

Beijing is enjoying an unusually long run of clear blue skies thanks to widespread industrial closures ahead of the most important international event hosted by President Xi Jinping.

The “New Silk Road” summit has attracted 29 national leaders from four continents and also prompted a nationwide security clampdown, as authorities try to ensure that it proceeds without a hitch. More than 80 other countries, including North and South Korea, are dispatching lower-ranking representatives to the event. 

On Thursday morning, a number of subway stations near the defence ministry were closed abruptly, but reopened later in the day. The ministry has been the site of occasional protests by thousands of demobilised soldiers over the past year, and any recurrence would be embarrassing for the Chinese government.

Formally known as the Belt and Road Initiative, referring to overland and maritime routes across the Eurasian landmass, the two-day conference opens on Sunday. The initiative is considered to be Mr Xi’s signature foreign policy, which Chinese officials argue is focused on mutual economic development rather than enhancing Beijing’s geopolitical power.

“The Belt and Road is not the Marshall Plan,” says Tsinghua University professor Hu Angang, referring to the US post-second world war programme to rebuild western Europe. “We are not going to do whatever we want. We are searching for common interest and co-operating with other countries on development strategies.” 

Regions as far away as Xinjiang, in China’s far north-west, have cited the summit when ordering stricter control of petitioners who often flock to the capital seeking help from central government officials. Residents in Tianjin, a large port city east of the capital, have been informed by local officials that they will not be allowed to fly kites or drones. 

Major road closures, including the expressway linking Beijing’s airport to the city centre, began on Friday and are expected to trigger four days of traffic chaos. 

The Belt and Road is not the Marshall Plan. We are searching for common interest and co-operating with other countries

Hotels have cancelled everything from chamber of commerce events to children’s art classes to accommodate VIPs including Russian President Vladimir Putin and Recep Tayyip Erdogan, his Turkish counterpart. 

Many of the activities will be centred around Yanqi lake, a resort area where many people maintain weekend homes. “The whole area is locked down,” said an employee at the Kempinski Hotel in Yanqi who asked not to be identified. “Some hotels have been closed since mid-April.”

Over recent weeks, village officials in the area have gone door-to-door checking IDs and warning Beijing-based expatriates that they will not be allowed to use their weekend homes over the next few days.

The Chinese government had hoped to assemble a weightier guest list to Mr Xi’s premier international forum, which is occurring just months before he formally begins a second five-year term in office. But many heads of state and government, especially from G7 and OECD nations, were reluctant to participate in what they thought might be little more than a propaganda coup for China’s ruling Communist party. 

Only seven EU heads of state or government, most from smaller eastern European countries, accepted Mr Xi’s invitation, while Kenyan president Uhuru Kenyatta will be the only top-level African VIP. 

Chinese officials had hoped that UK prime minister Theresa May would attend and also hold a bilateral meeting with Mr Xi, but their invitation was trumped by her decision to call a snap parliamentary election. The UK will instead be represented by Philip Hammond, chancellor of the exchequer, while the Trump administration is sending Matt Pottinger, Asia director on the National Security Council. 

Stefan Lehne, a former Austrian diplomat, said China had not yet been able to take advantage of the potential vacuum in international affairs created by Donald Trump’s isolationist rhetoric. “It’s very clear that what the EU is concerned about is its neighbourhood,” he said, referring to Russian aggression in the Ukraine and the Syrian refugee crisis. “In none of these situations is China a factor.” 

In private, some Chinese officials say that the Belt and Road Initiative is a potential “trap” — entangling them in everything from unproductive investments to regional disputes.

One of the largest projects associated with Mr Xi’s New Silk Road, a $55bn China-Pakistan Economic Corridor, has angered India, which says it runs through some territory claimed by New Delhi. “If Beijing is going to be so sensitive about its own sovereign claims in the South China Sea and elsewhere, perhaps they should be more sensitive to others’ claims as well,” said one Asian diplomat.

Additional reporting by Xinning Liu 

Investors poured $6bn of new capital into European stock funds in the past week, underlining the voracious appetite for assets across the continent as growth accelerates, earnings recover and several of the bloc’s largest countries move past critical elections.

The amount of flow in the five days to May 10 is the first time the weekly amount has passed $6bn since at least 2000 when EPFR began tracking the data.

The flows into funds that invest in European stocks mark a vote of confidence for an asset class that suffered a bruising 2016. During the year investors withdrew nearly $100bn as central bankers worked to tackle deflation and the UK’s Brexit vote fuelled uncertainty.

The defeat of Marine Le Pen in the French presidential election has allowed investors to breathe a sigh of relief over near-term risks to the euro, after political uncertainty added to investor reluctance to own eurozone stocks over much of the past year.

“Thanks to the macro interventions from the central banks . . . a tipping point has been reached,” said Vinay Pande, head of short-term investment opportunities at UBS Wealth Management.

“What has clearly helped tip us over was the data, GDP numbers that were outperforming the US. Earnings growth in Europe has been even better than in the US. And the last thing was the political risk. With that out of the way, the law of gravity must take over.”

Allocations to French stocks surged from a week earlier to more than $1.7bn following the election, while $2bn was added to dedicated German equity funds. Separate flows tracked by Lipper, which tracks only US-based funds, put inflows to European stocks at the second-highest level in records that date to 1992.

Benchmark stock indices in France, Germany, Spain, Italy and Switzerland have advanced more than 10 per cent this year. Economic growth at the start of the year matched the solid end to 2016 while surveys of manufacturers show activity is accelerating at a faster pace than in the US.

Unemployment across the region has receded from post-crisis highs with more than 1m jobs created in the eurozone last year, while inflation has firmed.

The shift into Europe has come at the expense of US stock funds, which suffered their second consecutive week of outflows despite the S&P 500 briefly touching a new high. Investors pulled $2.4bn from US stock portfolios in the past week, lifting redemptions since the middle of March to more than $20bn.

“When investors see months go by without the US market doing anything and people see European markets rip up . . . that has started to point investors east from the US,” said Brian Nick, chief investment strategist at TIAA Investments. “These regimes tend to last for a few years.”

Donald Trump’s abrupt termination of FBI director James Comey in the middle of an FBI probe into Russian interference in the 2016 election sent shockwaves through Capitol Hill. How Senators respond to this action matters, as Mr Trump cannot appoint a replacement for Mr Comey without the Senate’s approval. At the same time, the Senate intelligence committee is conducting its own investigation into Russian interference in the 2016 election.

Some Senate Republicans expressed concern about Mr Comey’s dismissal, or released more neutral statements that neither criticised nor praised the decision, while others voiced at least some support. Senator John McCain stands alone among Republicans by calling for a special congressional committee.

The reaction among Democrats was more along party lines: no Senate Democrats have voiced support for Mr Trump’s decision. Nearly all Senate Democrats have called for a special independent prosecutor to investigate the Trump campaign’s alleged ties to Russian officials.

The FT has broken down how Republicans and Democrats have lined up on the issue, starting with members of the Senate intelligence committee, who are conducting their own probe, and the Senate judiciary committee, as the decision to appoint a special prosecutor falls to the US judicial branch.

Senate intelligence committee members

Click on column headers to sort

Senate judiciary committee members

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All Senators

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*Called for independent investigation or independent commission

Additional reporting by Jennifer Bissell and additional development by Joanna Kao

The Federal Bureau of Investigation’s acting director has contradicted Donald Trump over the firing of James Comey, denying the ousted chief had lost the support of employees as he insisted the FBI’s Russia probe would not be knocked off course.

Andrew McCabe, the FBI acting director, also told the Senate intelligence committee that the probe into alleged collusion between Moscow and the Trump election campaign was “highly significant” as a senior Democrat accused Mr Trump of trying to obstruct investigators.

On Thursday, an irate Mr Trump doubled down on his claim that he had fired Mr Comey because of his performance, telling NBC: “He’s a showboat. He’s a grandstander. The FBI has been in turmoil . . . Everybody knows that.”

The atmosphere in Washington grew more feverish when the committee’s two top lawmakers broke off from the hearing for a previously unannounced meeting with Rod Rosenstein, the deputy attorney-general.

His visit to Capitol Hill followed reports that he had come close to resigning after White House officials had implied that the president fired Mr Comey on Mr Rosenstein’s recommendation. Mr Trump told NBC, however: “I was going to fire regardless of [his] recommendation.”

Mr McCabe’s testimony to the committee, on only his second day in the job, further challenged the White House account of why Mr Comey was terminated on Tuesday.

The White House said on Wednesday that Mr Comey had “lost the confidence” of rank-and-file FBI employees, but Mr McCabe said that was inaccurate. “I can confidently tell you that the majority — the vast majority — of FBI employees enjoyed a deep and positive connection with director Comey.”

Mr Trump’s decision to sack the man overseeing a Russian election interference investigation appeared designed to quell controversy over alleged ties between the president’s campaign and Moscow, but it has backfired by only intensifying scrutiny of the president’s motives.

Mr Trump said Mr Comey had told him he was not under investigation three times: once at “a very nice dinner at the White House” – arranged at Mr Comey’s request — and twice during two separate phone conversations.

Mr McCabe said the FBI’s investigation into potential ties between Trump associates and Moscow was continuing unimpeded, so far, despite Mr Comey’s dismissal.

“There has been no effort to impede our investigation to date. Simply put, you cannot stop the men and women of the FBI from doing our job,” he said. He vowed to inform the committee if the White House attempted to put political pressure on the FBI or on him personally over the agency’s probe.

Mark Warner, the top Democrat on the Senate intelligence committee, told the hearing the president had already hindered the search for the truth about the matter. “For many people, including myself, it is hard to avoid the conclusion that the president’s decision to remove director Comey was related to [the FBI’s Russia] investigation. And that is unacceptable,” he said.

Mr Warner said the committee had planned to call Mr Comey to answer “a series of difficult questions” related to whether the Trump campaign colluded with Russian officials.

“However, President Trump’s actions this week cost us an opportunity to get at the truth — at least for today,” he added.

Mr Comey had been due to appear before the committee on Thursday.

Mr McCabe, taking his place, told senators he was not at liberty to comment on whether Mr Comey had indeed told Mr Trump that the president was not under investigation — as the president had claimed in his letter publicly firing Mr Comey and reiterated to NBC.

It was “not standard practice” for the agency to inform an individual whether or not they were under investigation, he added.

Mr McCabe, CIA director Mike Pompeo, director of national intelligence Dan Coats, and National Security Agency director Mike Rogers all said they agreed with the intelligence committee’s assessment that Russia had interfered in the 2016 election.

FBI employees, meanwhile, were digesting a brief exit letter from Mr Comey, who wrote: “My hope is that you will continue to live our values and the mission of protecting the American people and upholding the Constitution.”

The dismissal of Mr Comey has shaken Washington, igniting the biggest crisis of Mr Trump’s presidency with opponents alleging that the president was seeking to frustrate the FBI probe.

These claims intensified after reports that Mr Comey had sought more resources from the US attorney-general’s office for its Russia investigation shortly before he was dismissed. Mr McCabe said the FBI had the resources it needed for the probe.

Robert Shrimsley: Imagining the first draft of Trump’s letter
Comey’s dismissal unfolds in uniquely Trumpian way
What are the options for an independent probe on Russia?

In Washington, reaction to Mr Trump’s actions has fallen largely on party lines, with Democrats demanding that the White House appoint an independent prosecutor to investigate possible connections between Russia and Trump associates, while Republicans have rebuffed such requests.

Uber should be regulated as a transport company and be subject to the same rules as normal taxis, according to a non-binding opinion by the Advocate General at the EU’s top court.

The opinion, stating that the US ride-hailing app “must be classified as a ‘service in the field of transport’”, would deal a major blow to Uber if followed with a final judgment by the European Court of Justice later this year.

The company had argued that it was providing “Information Society services”, a classification subject to looser rules in the EU. But this was dismissed, in an opinion that will reverberate among digital companies that offer “peer-to-peer” services in sectors such as accommodation and transport.

The court’s adviser argued that since Uber imposes conditions on drivers, guides them on where to go to pick up passengers and determines fares, it “cannot be regarded as a mere intermediary” between drivers and the app’s users.

“The service of connecting passengers and drivers with one another by means of the smartphone application is a secondary component” behind taking passengers to their destination, according to an ECJ statement.

Although such opinions are not binding on — and are sometimes ignored by — the court, the case raises the tricky question of how regulators should treat companies such as Uber, Airbnb and Skype, which offer rides, accommodation and communications despite not owning taxis, hotel rooms or telephone lines.

In the short term, the ECJ case has the potential to add to Uber’s European woes where it has faced an extremely tough regulatory ride. Uber’s introduction was met with a mixture of riots, fines and even the arrest of senior executives in some cities, while the app was broadly welcomed in others, such as London.

Uber played down the opinion. “Being considered a transportation company would not change the way we are regulated in most EU countries as that is already the situation today,” said an Uber spokesperson. “It will, however, undermine the much needed reform of outdated laws which prevent millions of Europeans from accessing a reliable ride at the tap of a button.”

In recent years, Uber has attempted to abide by local rules, after initially ignoring them. For instance, after initially facing fines of up to €10,000 per driver in Brussels, the company now operates a legal, regulated service in the city. It now says that it abides by local laws and works with independent, licensed minicab professionals so it would not have to change dramatically how it operates.

The company has faced stiff opposition from local taxi firms in most European cities it has entered. The current case was brought by Asociación Profesional Elite Taxi, a taxi driver association in Barcelona, which sought an injunction against the US group from a local judge.

In Brussels, however, the European Commission is pushing for member states to use a light touch with the car-hailing app and other similar services. One commissioner likened trying to ban Uber to “fighting with print in medieval times”. The EU’s executive arm has tried to reduce the regulatory differences between EU countries when it comes to digital services.

Uber also warned that this decision could be detrimental to the establishment of the digital single market, causing fragmentation of different apps across various member countries.

James Waterworth, vice-president at CCIA, a lobbying group for the technology industry, criticised the opinion. “As an app, you should set up in one country and be able to offer services in France, Netherlands etc without going through a special regulatory regime. This whole thing exists as a fundamental pillar of single market,” he said. “It’s a very negative signal for Europe’s digital single market, making it much harder to have cross-border internet businesses.”

Uber should be regulated as a transport company rather than a technology provider, according to a non-binding opinion by the Advocate General at the EU’s top court.

The US ride hailing app “must be classified as a ‘service in the field of transport’”, which would leave the US group open to tighter regulation in Europe if the opinion were to be followed in the final judgment at the European Court of Justice later this year.

During the case, Uber argued that it was an “information society service”. EU law dictates that such digital service cannot be unnecessarily constrained by local authorities. However there is no such protection for transport companies, which must abide by local rules.

A summary of the opinion stated that Uber should be treated as a transport company because “the service of connecting passengers and drivers with one another by means of the smartphone application is a secondary component.”

Such opinions are not binding – and are sometimes ignored – by the court. The case will have ramifications for Uber across the EU, where it has faced an extremely tough regulatory ride.

Uber’s introduction was met with a mixture of riots, fines and even the arrest of senior executives in some cities, while the app was broadly welcomed in others, such as London.

A final decision by the ECJ is due later this year.

Uber said:

We have seen today’s statement and await the final ruling later this year. Being considered a transportation company would not change the way we are regulated in most EU countries as that is already the situation today. It will, however, undermine the much needed reform of outdated laws which prevent millions of Europeans from accessing a reliable ride at the tap of a button.

A consortium led by Macquarie Group is buying a controlling stake in one of Australia’s biggest public energy companies in a deal that will deliver a A$7.6bn windfall to the New South Wales government. 

The sale of a 50.4 per cent stake in Endeavour Energy to the Advance Energy consortium completes a trio of energy sales in NSW under an “asset recycling” policy, which the US administration has flagged as a possible model for its own infrastructure programme. 

Under the Australian strategy public assets are leased by state governments to private interests for 99 years with the proceeds used for building projects. The federal government typically provides a 15 per cent bonus on the value of the asset sales made by states. 

“Through initiatives like asset recycling and our strong financial management, we have catapulted NSW from the bottom of the national economic ladder right to the very top,” said Dominic Perrottet, NSW’s treasurer, on Wednesday. 

The NSW government said it had now raised more than A$20bn over three years through its asset recycling policy to pump into road, rail, school and other projects across Australia’s most populous state. 

Advance Energy, a consortium comprising Macquarie, AMP Capital, Qatar Investment Authority and British Columbia Investment Management Corporation, will manage Endeavour Energy’s business, which supplies electricity to 2.4m people in Sydney and nearby regions. The NSW government will control the remaining 49.6 per cent stake in Endeavour Energy. 

The consortium beat off competition from a rival bid led by Hastings Funds management and Spark Infrastructure, two Australian companies. It is paying 1.6 times the regulated asset base — a measure of the value of assets in a regulated business.

Michael Cummings, head of funds at AMP Capital Infrastructure, said Advance Energy is committed to ensuring Endeavour Energy enhances its network to support growth. 

No major Chinese bidder participated in the Endeavour Energy sales process, which followed controversy when China’s State Grid Corporation and Hong-Kong-based Cheung Kong Infrastructure were blocked last year from bidding for Ausgrid, Australia’s biggest electricity company on national security grounds. 

However, investor interest in Australia’s energy and infrastructure sector remains strong. In April CKI finalised a A$7.4bn deal to buy Duet Group, an Australian listed infrastructure group, and in March Hong Kong’s Chow Tai Fook group agreed a A$4bn deal to buy Alinta Energy, a privately owned company. 

Australian federal and state governments developed the “asset recycling” strategy in 2014 as a way to boost economic growth and build much needed infrastructure. NSW embraced the model and sold Transgrid for A$10bn in 2015 and a controlling stake in Ausgrid for A$16bn last year. 

Other Australian states have been slower to follow suit due to political concerns over the privatisation of public assets. But the model is attracting attention overseas, particularly in the US where President Trump plans to reveal a US$1tn infrastructure plan later this year. 

Steven Roth, co-chairman of Mr Trump’s infrastructure task force, recently said the US administration was looking “very carefully” at how Australia is financing its building programme through “infrastructure recycling”.

An unabashed Donald Trump called for warmer US relations with Russia on Wednesday as his firing of FBI director James Comey sparked pressure from Democrats for an independent probe of his election campaign’s alleged ties to Moscow.

Mr Comey’s dismissal shook Washington, igniting the biggest crisis of Mr Trump’s presidency as opponents amplified allegations throughout the day that the president was seeking to frustrate the FBI probe.

Adding to the drama late on Wednesday, the Senate intelligence committee subpoenaed Mike Flynn, Mr Trump’s sacked national security adviser, for documents that he had failed to provide to its own Russia investigation.

The events heralded a new period of turmoil in which Russia-related controversies risk monopolising the capital’s attention at the expense of policy priorities such as tax and healthcare reform.

On Wednesday Mr Trump was shown warmly greeting foreign minister Sergei Lavrov and ambassador Sergei Kislyak in photographs distributed by Russia’s foreign ministry.

US reporters were not invited to witness the meeting, but the White House, undeterred by controversy, released a statement saying Mr Trump had “emphasised his desire to build a better relationship between the United States and Russia”.

With Mr Lavrov the president said he had a “very, very good meeting” as he spoke in a brief Oval Office appearance alongside Henry Kissinger, the former national security adviser and secretary of state to Richard Nixon who has become a Trump adviser.

The White House insisted Mr Comey’s sacking was unrelated to Russia, instead citing Mr Comey’s handling of an FBI probe into whether Hillary Clinton improperly used a personal email server.

Democrats said that was hard to believe as they united behind calls for a special prosecutor to take charge of the probe into Russia ties. Chuck Schumer, the top Senate Democrat, said failure to take that step would fuel speculation of a cover-up.

Their calls were quickly rebuffed by Mitch McConnell, the Republican Senate majority leader, whose stance influences many lawmakers. Several senior Republicans said they were “troubled” by the removal of Mr Comey, but most stopped short of outright criticism of the president.

Sarah Huckabee Sanders, a White House spokeswoman, said Mr Trump had been considering dismissing Mr Comey “since the day he was elected”, even though the White House said earlier this month the president had confidence in him.

Mr Comey’s testimony to Congress last week had left the president minded to remove him, the White House added in an official timeline circulated later, which said that on Monday Mr Trump discussed reasons for doing so on with attorney-general Jeff Sessions and Rod Rosenstein, his deputy.

The FBI’s new acting director, Andrew McCabe, met Mr Trump at the White House on Wednesday afternoon and is expected to appear at a Senate intelligence committee on Thursday.

John McCain, the Arizona senator and 2008 Republican presidential candidate, said the dismissal underscored the need for a special congressional committee, a message echoed by Lindsey Graham, the Republican South Carolina senator, who insisted Mr Comey’s firing would not stop the investigation into the Russian case.

Was he fired? You are kidding, you are kidding

Democrats voiced harsher criticism. “Given that subpoenas were issued to Trump’s people regarding Flynn hours before this, it’s shocking because Trump is betting the farm,” said Howard Dean, a former Vermont governor who ran for the Democratic presidential nomination in 2004.

“But it’s also shocking because it’s a Nixonesque indication that corruption is likely, and I think he [Trump] is letting himself in for an enormous problem,” he added.

Douglas Brinkley, a presidential historian at Rice University, said the White House could only be held accountable if senior Republicans broke ranks to join Democratic calls for a special prosecutor. “The Democrats are united, but it’s going to take Republicans to put the country above Trump,” he said.

It would fall to Mr Rosenstein, the Department of Justice’s number two official, to appoint a special prosector, as Mr Sessions has recused himself from Russia-related investigations.

Edward Luce: Trump’s Tuesday night massacre
Memo behind dismissal, decoded
Rod Rosenstein comes under scrutiny
Comey dismissal follows uniquely Trumpian script
Rosenstein faces calls to name lawyer for Russia probe
Timeline: Comey’s downfall

Taking to Twitter on Wednesday, Mr Trump repeated the charge that the FBI director had lost the confidence of many in Washington. “Dems have been complaining for months & months about Dir. Comey. Now that he has been fired they PRETEND to be aggrieved. Phony hypocrites!” he wrote.

Mr Comey, a Republican who was appointed by Barack Obama, had a golden reputation until the 2016 election when he sparked controversy over his handling of the investigation into Mrs Clinton’s use of her private email server. 

Mrs Clinton said last week that Mr Comey’s revelation days before the November 8 vote that he had reopened a probe into her email use cost her the presidency. “If the election had been on October 27, I would be your president,” she said.

Additional reporting by Demetri Sevastopulo

Snap fell short of Wall Street’s expectations in its first quarterly results as a public company, sending its shares tumbling by almost a quarter in value in after-hours trading to hit a new low.

The maker of the Snapchat app reported revenue growth of 286 per cent to $149.6m but analysts had been expecting almost $10m more than that. Losses were also wider than forecasts.

Daily active users, which have been a cause of concern as Facebook and Instagram copied many of Snapchat’s features, were up 36 per cent year on year to 166m. Investors, however, were looking for 167m-170m.

Evan Spiegel, Snap’s chief executive, opened his first earnings briefing call since March’s initial public offering by saying that the company had focused during the quarter on the performance and quality of its Android app, as well as automating its advertising business.

“Overall I feel we have executed well on our priorities for this quarter,” he said, pointing to an increase in new users from Android smartphones and growth in overall time spent in the app, driven by new features such as search.

“These improvements helped drive a significant increase in engagement,” Mr Spiegel said, with 3bn snaps created every day, up from 2.5bn in the third quarter of last year. “We still have a lot of work to do but we are excited by the amount of progress we have made in a short time.”

Snap’s average revenue per user — a metric the Los Angeles-based company has encouraged investors to focus on as it grows its nascent advertising business — was 90c, up 181 per cent year on year and a little better than some analysts were expecting. Arpu for the three months to March was down 14 per cent from the fourth quarter’s $1.05, because the holiday sales season is typically stronger for advertising.

Analysts are not expecting Snap to post a profit until 2019 at the earliest. Net losses for the quarter were $2.2bn, much of that due to one-off IPO costs and stock-based compensation. Even after adjusting for that, losses before interest, taxation, depreciation and amortisation were still deeper than analysts anticipated at $188.2m. Capital expenditures jumped from $12.4m to $18m year on year.

Shares in Snap were volatile in after-hours trading but fell as much as 24 per cent to $17.50. At March’s IPO, Snap stock was priced at $17 and topped $24 on its first day of trading.

Jes Staley, chief executive of Barclays, has apologised to shareholders for the “error” he admitted he had made in trying to uncover the identity of a whistleblower.

In an attempt to take the sting out of the bank’s annual meeting on Wednesday, the Barclays CEO said: “I feel it is important that I acknowledge to you, our shareholders, that I made a mistake in becoming involved in an issue which I should have left to the business to deal with.

“I have apologised to the board, and I would today like to apologise to you as well, for that error,” said the 60-year-old American hired to run Barclays in December 2015.

The board has given Mr Staley a formal reprimand and promised to cut his pay by a “very significant” amount for ordering the bank’s security team to try to identify a whistleblower who had made allegations about a recently recruited colleague.

Regulators in the UK are investigating the matter in the most significant test to date of the country’s new senior manager regime, which allows the authorities to bar executives from the financial sector for serious wrongdoing if they are judged not “fit and proper”.

John McFarlane, chairman, told investors at the AGM: “You know me, if I believed a chief executive should go, he would go. But I do not believe that is what should happen.”

“As long as he wasn’t successful in identifying the individual, he just made a mistake and you can’t be as good as your last mistake,” he said. “I have been doing this for 40 years and I mean if that was the standard I would have gone years ago.”

Mr McFarlane defended Mr Staley, pointing out the board believed it was dealing with an “external” whistleblower from the US rather than a Barclays employee.

He added that when Mr Staley first asked about the whistleblower, he was told he was not allowed to pursue their identity. When he asked about it a second time he was told the case was closed, which he mistakenly interpreted as a signal that he could try to identify the source of the letters.

“He thought he had a green light and he went through the green light and actually it was red,” said Mr McFarlane, known as “Mac the Knife” for his habit of firing CEOs both at Barclays and in his previous job at insurer Aviva.

The chairman said all directors agreed to stick with Mr Staley when they discussed the issue. “We ended up in a position that provided he was willing to see it through, which was going to be difficult for him, we were perfectly comfortable about supporting him . . . He tried something but didn’t succeed and it was one episode in what was hundreds of decisions that he has made.

“At the time he was a relatively new chief executive — it’s no excuse — but he had to learn his lesson and he has done that,” said the chairman. “The action for going through a red light usually is you do not lose your licence.”

Michael Mason-Mahon, an individual shareholder, asked: “Has the behaviour of the CEO brought nothing but shame on the name of Barclays? For the sake of Barclays plc and its shareholders and its customers, will you behave with honour and resign today?”

Another shareholder said: “It beggars belief that Mr Staley was not aware of the whistleblower procedures or was not briefed on them when he joined the bank.” A third shareholder said the affair cast doubt on the “moral calibre” of the bank.

Most shareholders and board members think he will survive the regulators’ investigations, which Mr McFarlane said were likely to take several months. “We are not in full control of this but we think the regulatory authorities are dealing with the same facts,” he said.

ISS, a proxy adviser to many large shareholders, advised investors not to vote in favour of Mr Staley’s re-election, which resulted in 13 per cent withholding their support from the CEO and about 2.4 per cent voting against him.

There was also a sizeable protest vote against Sir Ian Cheshire, who won support of only 86 per cent of investor votes after criticism of his numerous other directorships, some of which he has promised to give up by September.

Meanwhile, 14 per cent of investors voted against amendments to the bank’s long-term incentive plan, which make it easier for executives to earn the full amount even if they leave early.

Separately, Barclays agreed to pay $97m in compensation to asset management clients who were overbilled for services and products in a settlement with the US Securities and Exchange Commission that was announced on Wednesday.

The SEC said the bank had charged more than 2,000 clients for due diligence and monitoring services that were not performed as represented, collected excess mutual fund sales charges or fees from 63 brokerage clients, and over-charged 22,138 accounts due to miscalculations and billing errors.

“Barclays failed to ensure that clients were receiving the services they were paying for,” said Dabney O’Riordan, co-chief of the SEC enforcement division’s asset management unit.

The overcharging allegations concern the bank’s US wealth management business, which was sold with about $56bn of client assets to Stifel Financial in 2015. Barclays, which did not admit or deny the SEC’s findings, declined to comment.

Time Inc cut its dividend and announced a board shake-up as the magazine publisher reported a steeper than expected first-quarter net loss and decline in revenue.

The owner of Time, People and Sports Illustrated is in the midst of a strategic reorganisation aimed at shifting its business from print to digital, following its decision last month not to sell itself.

Its net loss widened to $28m, or 29 cents a share, from a loss of $10m, or 10 cents a share, in the first quarter of 2016. Excluding some items including severance and restructuring costs, adjusted losses of 18 cents a share were worse than the 15 cents loss analysts forecast.

Revenue fell 8 per cent to $636m from $690m a year ago, below estimates of $642m. Advertising sales fell 8 per cent to $331m on a 21 per cent drop-off in print ad revenue. Digital ad sales rose 32 per cent, mainly due to acquisitions. Circulation revenue dropped 14 per cent.

The company reduced expenses by 7 per cent to $615m, but it also booked $16m in restructuring and severance costs.

Time Inc said it would no longer provide quarterly or annual revenue guidance. The company previously said it expects 2017 revenue to dip to $3bn, its sixth straight year of decline.

The publisher cut its quarterly dividend from 19 cents to 4 cents, in an attempt to strengthen its balance sheet and reduce leverage. It carries $1.2bn in long-term debt, dating back to its spin-off from Time Warner nearly three years ago.

“The objective is to provide us with strategic and financial flexibility in order to better focus on investing in growth and at the same time maintaining a strong balance sheet,” the company said.

Time also announced changes to its board of directors. Joe Ripp, who previously served as chief executive, is retiring as executive chairman, and Sir Howard Stringer, the former chair and chief executive of Sony, is leaving the board.

The board has elected John Fahey, its current lead independent director, who formerly ran the National Geographic Society, to the position of non-executive chairman. In addition, Dan Rosensweig, the former chief operating officer of Yahoo and current chief executive of Chegg, an online learning platform, has been nominated to the board. Shareholders will vote on the board’s composition at Time Inc’s annual meeting.

Last month Time Inc said it would remain independent, ending months of speculation over its future. Despite drawing interest from suitors including Meredith, the publisher of Better Homes and Gardens and Martha Stewart Living, Time Inc’s board decided to stick with a strategic plan focused on digital growth, new revenue sources and cost-cutting measures. That could include the sale of some titles.

The company has said it will increase revenues through investments in native advertising and video and by selling products and services to its 30m subscribers.

“In the first quarter of 2017, we made important progress on our strategic plan despite continuing challenges with print advertising revenues. We are taking strategic actions and focusing on key initiatives to put the company on the right course for the future,” said Rich Battista, chief executive.

Shares in Time Inc fell 8 per cent to $13.90 in pre-market trading in New York.

Bridgepoint, the UK-based private equity firm, is working with bankers to prepare a US listing of the Pret a Manger, the fast-growing food-and-coffee-shop chain beloved by office workers.

JP Morgan and Jefferies have recently been appointed to lead an initial public offering that could take place in New York before the end of the year, according to two people with knowledge of the situation.

Credit Suisse, Barclays and Piper Jaffray are also working on the deal. Details of the appointment of bankers running the IPO were first reported by Bloomberg.

The appointment took place recently and terms between Bridgepoint, the company and bankers are under negotiation, one of the people said: “Nothing has been decided on anything, there is now a lot of research and prep work to be done.”

JP Morgan declined to comment.

Bridgepoint said:

As a committed shareholder in Pret we are always exploring appropriate opportunities to ensure the future growth of the company. If such opportunities materialise, we will update the market.

Pret, which was founded in London in 1986, recently reported a 15 per cent increase in total sales for 2016 to £776m. The company opened 50 new stores, taking its total number of ​shops to 444. Earnings before interest, tax, depreciation and amortisation rose 11 per cent to £93m.

Saudis often liken Aramco, the kingdom’s state oil company, to a fat cow or productive hen.

The company has for decades been the bedrock of the economy and the enabler of the government largesse to which Saudis have grown accustomed. Now its future has become a source of concern as disquiet grows over plans by Mohammed bin Salman, the deputy crown prince, to sell a 5 per cent stake in Aramco.

In recent weeks the hashtag “Mohammed has sold the chicken” has been trending on Twitter, as social media has become the platform for an outpouring of discontent.

“What showered us in riches and goods has been sold,” said one anonymous post. “What is left for us apart from the unknown, oh Prince? Of course, for us the unknown and the future for you.”

The criticism of Prince Mohammed and his plans underlines the challenges the powerful young leader faces as he tries to push through bold reforms intended to overhaul Saudi Arabia’s oil-dependent economy. The initial public offering of Aramco, which would be the world’s biggest IPO, is core to his plans. He hopes to raise $100bn through the sale, which is supposed to take place in 2018.

But resistance to his plans, which include painful austerity measures as Riyadh tries to narrow a yawning fiscal deficit and counter the impact of low oil prices, is simmering. This month, the government reversed cuts to civil servants’ benefits, a surprising U-turn in the face of public pressure that included petitions and an online call for street protests.

Days later, Prince Mohammed addressed the grumblings over the Aramco IPO, insisting the sale would not be derailed and saying it was crucial to the kingdom’s economic diversification efforts.

Critics of the IPO were engaging in “socialist, communist thinking”, he said in an interview with Saudi television.

“The amount of money we will make through Aramco will help us seize many opportunities,” he added.

Many Saudis do support his reform plans as they recognise the need to tackle a fiscal crisis triggered by the oil price slump. But the Aramco IPO is particularly sensitive. Oil is regarded by many as a birthright: the foundation of national wealth and a guarantor of future generations’ wellbeing.

Saudi oil reserves, initially exploited by US companies, were gradually taken under national ownership in the 1980s. Older Saudis remember the challenge of taking control of their prized asset and now wonder why Riyadh would reverse that accomplishment.

The genesis of the rebellious hashtag criticising the proposed sale appeared to be a comment from Othman al-Khowaiter, a former Aramco vice-president, who is one of the few prominent voices to criticise the planned IPO publicly.

“Aramco is the hen that lays golden eggs,” he tweeted in March, describing privatisation as a tool best used when dealing with lossmaking enterprises. “It is unacceptable to compromise any part of it under any circumstances.”

Few Saudi dare to speak out publicly for fear of appearing opposed to Prince Mohammed’s “Vision 2030” programme. But a Riyadh-based corporate lawyer said “the majority of the people I know are against the sale”.

“Some of them have a business case against it but many are simply against what they see as selling what they consider ‘rightly ours’,” he added.

Barjas Albarjas, an economic commentator, says Saudis’ anxiety over the IPO is overstated, adding that people’s concerns would dissipate once feasibility studies are completed.

“Humans by nature are negative to change, especially the ones who are used to being fed by their sugar daddy,” Mr Albarjas said.

Prince Mohammed is staking his credibility as a future king on transforming the economy into a private-sector-led growth engine hinging on sectors such as mining, manufacturing and tourism.

But the discontent with the planned IPO reveals many hurdles he faces along the way.

“You know what they say about Vision 2030 — they give us 20 but take back 30,” quipped one junior state employee.

It took Richard Nixon five months to fire the man investigating him. It took Donald Trump less than four. The difference is that Mr Nixon did little to conceal his motive — to save his presidency. Mr Trump, on the other hand, says he fired James Comey for having mishandled last year’s email investigation into Hillary Clinton. Even by Mr Trump’s standards, this stretches credulity. Mr Trump is asking the US public to believe he “terminated and removed” the FBI director for having treated Mrs Clinton unfairly. This was the same opponent whom Mr Trump said should be locked up for mishandling her emails. Now, apparently, Mrs Clinton was the victim of an unprofessional probe and Mr Trump is setting things straight.

Mr Comey’s firing was ostensibly prompted by the revelation that he had misdescribed his decision last October to reopen the Clinton email investigation — a move that many believe tipped the election in Mr Trump’s favour. Yet Mr Comey, who until Tuesday night was overseeing the investigation into the Trump campaign’s alleged collusion with Russia to influence last year’s election, only disclosed his misstatement this week. Mr Trump, on the other hand, was cavilling at the FBI director long before Mr Comey’s disclosure. Last week Mr Trump tweeted: “FBI Director Comey was the best thing that ever happened to Hillary Clinton in that he gave her a free pass for many bad deeds!” Mr Comey, in other words, was already in Mr Trump’s sights.

The implications are dramatic. Like any US federal scandal, the details mount but the basics remain simple. Having fired the head of the only Russia investigation taking place within the executive branch, Mr Trump will now conduct a search for Mr Comey’s replacement. What are the chances he selects an independent figure who will pick up the Russia investigation where Mr Comey left off? What are the odds Mr Trump’s FBI nominee gets the necessary fifty votes for Senate confirmation? Mr Trump will be aided in his search by Jeff Sessions, the attorney-general, who was forced to recuse himself from overseeing Mr Comey’s investigation because of his undisclosed contacts with the Russian ambassador. This was the same ambassador with whom Michael Flynn, Mr Trump’s first national security adviser, held conversations secretly recorded by the FBI. The leaked contents of those, in turn, led to Mr Flynn’s firing.

Like any US federal scandal, the details mount but the basics remain simple.

These are just the outlines. The key point is that Mr Trump has fired the man investigating him. Nixon’s “Saturday night massacre” in which he fired Archibald Cox, the special prosecutor, is the only precedent.

There are three consequences. The first is that calls will mount to appoint a special prosecutor to take over the Russia investigation. Mr Nixon was compelled to do so — as was Bill Clinton. Mr Trump will resist any such move. Only his fellow Republicans can force him to take that step. The pressure on Republicans to uphold the integrity of the US judicial system will sharply intensify. If one Republican senator, such as John McCain, breaks ranks, others would follow. So far the partisan line is holding. But it is under acute stress.

The second is that Mr Trump will now find it impossible to banish the Russia narrative. In politics, bandwidth is power. It will be hard for Mr Trump to achieve much else while the Russia shadow hangs over him. It is difficult to believe he would have taken such a step had he believed leaving Mr Comey in place would pose a lesser risk. Having been blamed widely for tipping the election to Mr Trump, Mr Comey was on a quest to salvage his reputation. Now that he is gone, others in the FBI may take the initiative. It is worth remembering that Nixon was undone by a disgruntled FBI official, Mark Felt, who leaked details about his Watergate cover-up to the Washington Post. Either way, talk of the Trump administration’s “normalisation” look premature. We are entering Nixonian territory.

The third consequence is how this will go down in Moscow. The Russian government has made little secret of its desire to contaminate US democracy. On Tuesday Vladimir Putin chalked up another victory. The US president did something typically associated with a non-democracy. He interfered with the course of justice. Not even Nixon fired the head of the FBI. Russia may not achieve a grand bargain with the US to create its own sphere of influence. Mr Trump would find it hard to make any kind of geopolitical concession without provoking Republican hawks, such as Mr McCain. But Russia has already won the prize it sought. American democracy is in a deepening crisis. When and where it will end is anybody’s guess.

edward.luce@ft.com

A group of US senators has urged a government investigation into billionaire Carl Icahn’s involvement in an obscure market for US biofuel credits, arguing he profited by influencing prices through his role as informal counsel to President Donald Trump.

Mr Icahn controls CVR Energy, an oil refiner which trades credits used to meet a federal mandate for mixing ethanol and biodiesel with petroleum products.

In December, the investor was named special adviser on regulatory reform to the White House. He also helped vet Mr Trump’s nominee to head the US Environmental Protection Agency, which sets policies for the biofuel mandate.

The cost of biofuel credits, long bemoaned by CVR management, declined sharply after Mr Icahn was named White House adviser, on the assumption that the new administration might loosen the terms of the mandate. News organisations later reported that CVR had positioned itself up to cash in from a fall in the market for credits, known as Rins.

Eight Democratic senators including Elizabeth Warren of Massachusetts and Debbie Stabenow of Michigan sent a letter on Tuesday asking three federal agencies to investigate whether Mr Icahn violated laws on insider trading and market manipulation based on CVR’s trading in the credits.

“Mr Icahn ‘made a massive bet in 2016’ that the price of the renewable fuel credits would drop. He then — as an unpaid adviser to President Trump — recommended personnel and policies that did in fact cause the price of these credits to drop,” the senators wrote, citing Reuters articles.

Jesse Lynn, general counsel at Icahn Enterprises, did not immediately respond to an email seeking comment. Of the three federal agencies addressed by the letter, the Securities and Exchange Commission and the Commodity Futures Trading Commission declined to comment and the EPA did not immediately respond to a query.

A filing from CVR’s refining partnership disclosed a net gain of $6.4m from Rins in the quarter ended March 31. This compared with an expense of $43.1m in the same quarter of 2016, a positive swing of nearly $50m. The partnership estimated Rins would cost $170m for the full 2017 year.

“The price of Rins has been extremely volatile over the past year. The future cost of Rins is difficult to estimate,” the filing said. CVR declined to comment in response to a query from the Financial Times.

Mr Icahn has argued vociferously that wholesalers and petrol stations should bear the burden of buying Rins, not refiners. He refuted suggestions of a conflict of interest in an interview with the Financial Times in January. “It’s true that I would benefit as a refinery owner, but so would every refinery as well as the small gas station owners and . . . the public,” he said.

The senators wrote: “We have no way of knowing at this time whether Mr Icahn made any of his renewable fuel credit trades or decisions about trades based on material, non-public information or otherwise manipulated the market. But the publicly available evidence is troubling, and based on this evidence, we ask that your agencies investigate whether Mr Icahn’s conduct violated any laws under your jurisdiction.”

Shares of CVR briefly dropped 2.5 per cent after the letter became public, but rebounded to trade 0.4 per cent lower at $22.20 at the close in New York on Tuesday.

Donald Trump’s promise of the biggest tax reforms since the Reagan era has cast minds back to the go-go years of postwar Manhattan, when cocktail glasses brimmed, steaks bulged and meal bills soared.

The generous treatment of business meal expenses fuelled a phenomenon called the “three martini lunch”. As good for networking as it was bad for afternoon acuity, the more money diners spent on liquor, the more they could trim off their tax bills.

“It was an axiom. It was like breathing,” says one lobbyist recalling 1980s Wall Street. In the show Mad Men the libations spurred the creativity of 1960s ad men. But in a 1986 tax revamp lawmakers turned against them, a move to raise revenue that holds lessons for today’s reformers.

Mr Trump has put tax reform at the centre of his economic agenda, proposing to slash rates for companies and individuals to boost growth and prosperity. But the White House has yet to convince even Republican lawmakers it has a viable plan.

A one-page list of White House goals last month said far more about cutting rates than paying for them. Assurances that economic growth would fill a looming deficit gap were met with scepticism. The Committee for a Responsible Federal Budget estimated the proposals would lead to a loss of $3tn to $7tn over 10 years, hard to swallow for many Republican lawmakers.

If Mr Trump wants Congress to pass substantive reforms before next year’s Congressional elections, he needs to find ways to pay for them. Some funds could be scraped together by eliminating loopholes and exemptions that pock the tax code. But the three martini lunch is a reminder that every break is cherished by someone and often has an institutional constituency ready to fight for it.

“People just love their exemptions and deductions in this country, even if they’re a small thing,” says Steve Rosenthal at the Tax Policy Center, a think-tank, who tracked the 1986 reforms as a junior lawyer. “They feel like they’re getting away with something.”

According to the Center on Budget and Policy Priorities, the government in 2015 spent a whopping $1.2tn on deductions and exclusions, more than it spent on the Medicare and Medicaid health programmes combined.

When Steven Mnuchin, Treasury secretary, unveiled the sketchy White House tax plan he said it wanted to eliminate most personal tax deductions. But he signalled it had no desire to tamper with two sacred cows: the ability of individuals to deduct mortgage interest and charity donations from their taxable income. That was good news for banks, which like home loan incentives, and non-profit groups, which depend on gifts.

People just love their exemptions and deductions in this country, even if they’re a small thing

The White House’s plans would mean the end of deductions for interest paid on student loans and contributions to retirement accounts.

David Brockway, a lawyer who was chief of staff for Congress’s joint committee on taxation in 1986, said: “If you want to raise revenue by broadening the tax base, you have to take something away from the public. If you do that, you start losing members of Congress.”

The White House says it would cushion the blow by doubling a portion of earnings that go tax free to $24,000 for married couples. One deduction it has been eager to knock off lets people subtract what they have paid in state and local taxes from their federal taxable income, costing the US an estimated $96bn this year alone, according to the Tax Policy Center.

As it happens, that deduction hands the biggest benefits to well-off people in left-leaning, high tax states such as New York, Connecticut and Maryland, which did not vote for Mr Trump.

The most expensive individual tax break, which differs from a deduction, ensures people do not get taxed on payments from their employers for health insurance. It cost the government an estimated $144bn in 2016, but is not on the chopping block.

Change can be made in increments. The ability to deduct business entertaining expenses was not eliminated in 1986. Instead the write-off was cut from 100 per cent of expenses to 80 per cent — and would later be slashed in 1993 to 50 per cent.

The move had an anti-elitist thrust that would resonate today. People were already drinking less at lunch than they used to, but the three martini lunch endured as a symbol of privilege subsidised by the less fortunate, said Mr Brockway.

Executives responded that entertaining helped them create jobs, but they did not lead the fight against the reform. Instead, organised opposition came from the restaurant industry, which warned it would lose billions of dollars in revenue as people gave up business lunches. The industry lost the argument.

If Mr Trump persists in trying to take the drinks tray away from more tax break beneficiaries this year, he will have a few fights on his hands.

@barneyjopson