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UK government borrowing costs have hit a 20-year high after the Bank of England confirmed its emergency bond-buying programme will end on Friday as planned.

On Wednesday morning, it said all temporary and targeted purchases of UK government bonds, known as gilts, would stop.

This has been the position throughout and has been “made absolutely clear in contact with the banks at senior levels”, the Bank said in a statement.

However, the clarification of its position did little to soothe investor nerves, with a sell-off taking 20 and 30-year gilt yields – the rate demanded to hold government debt – to their highest level since 2002.

Both exceeded 5.1% earlier on Wednesday.

The emergency 13-day bond buying programme was started to avoid “dysfunction” in the pension market which took hold amid bond market unease over UK borrowing requirements following the government’s mini-budget.

The programme is aimed at tackling the consequences of rising interest rates on government bonds, which increased the cost of holding the bonds and resulted in pension funds facing a liquidity crunch.

There had earlier been suggestions that the Bank could backtrack, however, and extend the bond-buying beyond Friday’s cut-off.

The Financial Times said the Bank had been privately telling those working in pension funds that it could be extended.

This came despite the governor, Andrew Bailey, firmly stating pension funds had “three days left… to get this done” at an event in Washington on Tuesday evening.

In its statement on Wednesday, the Bank reaffirmed it would continue to support the pension markets in other ways beyond Friday.

This would be done via the Bank’s temporary yet open-ended measure to help lenders facing liquidity issues who work with the corner of the pensions market that had experienced difficulties. The measure was announced on Monday.

The Financial Times report said those involved in derivatives needed more time to avoid the forced selling that led to the Bank’s intervention on 28 September.

Read more:
What on earth is happening in UK markets?
What are bonds and where do they fit in the mini-budget crisis?

It was revealed later in the day that the Bank accepted £1.9bn worth of offers in its daily index-linked bond buy-back operation.

It also accepted all £2.3754bn of long-dated conventional gilts which it was offered – the highest sum since the scheme began on 28 September but well below the £5bn it would have been prepared to buy.

The pound clawed back some of the losses versus the dollar incurred on Tuesday after Mr Bailey’s refusal to extend the bond-buying support beyond Friday, trading just shy of $1.11.

30-year bond yields were hovering just below their level before the Bank’s first intervention – at 4.9% – after striking the 20-year high earlier in the day.

The thinking behind the emergency bond-buying has been questioned by the Treasury Committee of MPs.

The chair of the Treasury Committee, Mel Stride, wrote to the deputy governor at the Bank on Wednesday and asked for an update on the emergency interventions, querying what further action will be required by the Bank to prevent risks to financial stability.

Mr Stride also asked how the Bank decided to expand its emergency intervention on Monday, to launch new liquidity support to lenders and start buying index linked gilts (with interest rates in line with inflation). He questioned why these interventions were not part of the original intervention announced on 28 September.

What is the Bank of England’s bond-buying programme?

The Bank signalled it is ready to increase interest rates again in November as it fights to bring inflation down to 2%. Most recent figures show inflation was at 9.9%.

Once again the Bank’s chief economist, Huw Pill, said interest rates likely need to rise.

“At present, I am still inclined to believe that a significant monetary policy response will be required to the significant macro and market news of the past few weeks.”

The Bank’s monthly financial policy summary was released on Wednesday and warned UK households will become more vulnerable to financial shocks.

“Rises in the cost of living and interest rates will increase pressure on UK household finances and make households more vulnerable to shocks,” the Bank’s Financial Policy Summary and Record said.

Further warnings on the economic health of businesses were issued: “For businesses, higher costs, lower household demand and rising interest rates will reduce earnings. Some may find it harder to repay debts.”

Households may be less impacted by rising interest rates due to being on fixed-term repayment plans and having less debt, the Bank said. Accordingly there is a reduced risk of defaulting on repayments.

“People have less debt (relative to their incomes) and the share of high loan-to-value mortgages is much lower than before the global financial crisis. This reduces the risk of them defaulting on debt and banks are now required to be flexible in their response,” the report said.

The banks are in a better position than the financial crash too and are able to help households should they fall into financial difficulty, the Bank concluded.

“The UK banking sector is substantially more resilient than before the global financial crisis, with significantly higher levels of capital and liquidity. They can continue to support households and businesses even if economic conditions get worse.”

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Trump announces weapons deal with NATO to help Ukraine – as he gives Putin 50-day ultimatum

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Trump announces weapons deal with NATO to help Ukraine - as he gives Putin 50-day ultimatum

Donald Trump has agreed to send “top of the line weapons” to NATO to support Ukraine – and threatened Russia with “severe” tariffs if it doesn’t agree to end the war.

Speaking with NATO secretary general Mark Rutte during a meeting at the White House, the US president said: “We’ve made a deal today where we are going to be sending them weapons, and they’re going to be paying for them.

“This is billions of dollars worth of military equipment which is going to be purchased from the United States,” he added, “going to NATO, and that’s going to be quickly distributed to the battlefield.”

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Weapons being sent include surface-to-air Patriot missile systems and batteries, which Ukraine has asked for to defend itself from Russian air strikes.

Donald Trump and NATO secretary general Mark Rutte in the White House. Pic: Reuters
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Pic: Reuters

Mr Trump also said he was “very unhappy” with Russia, and threatened “severe tariffs” of “about 100%” if there isn’t a deal to end the war in Ukraine within 50 days.

The White House added that the US would put “secondary sanctions” on countries that buy oil from Russia if an agreement was not reached.

It comes after weeks of frustration from Mr Trump against Vladimir Putin’s refusal to agree to an end to the conflict, with the Russian leader telling the US president he would “not back down” from Moscow’s goals in Ukraine at the start of the month.

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Trump says Putin ‘talks nice and then bombs everybody’

During the briefing on Monday, Mr Trump said he had held calls with Mr Putin where he would think “that was a nice phone call,” but then “missiles are launched into Kyiv or some other city, and that happens three or four times”.

“I don’t want to say he’s an assassin, but he’s a tough guy,” he added.

Earlier this year, Mr Trump told Ukrainian leader Volodymyr Zelenskyy “you’re gambling with World War Three” in a fiery White House meeting, and suggested Ukraine started the war against Russia as he sought to negotiate an end to the conflict.

After Mr Trump’s briefing, Russian senator Konstantin Kosachev said on Telegram: “If this is all that Trump had in mind to say about Ukraine today, then all the steam has gone out.”

Read more:
Trump announces 30% tariff on EU imports

Trump threatens to revoke US comedian’s citizenship
Two women killed after shooting at US church

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Meanwhile, Mr Zelenskyy met with US special envoy Keith Kellogg in Kyiv, where they “discussed the path to peace” by “strengthening Ukraine’s air defence, joint production, and procurement of defence weapons in collaboration with Europe”.

He thanked both the envoy for the visit and Mr Trump “for the important signals of support and the positive decisions for both our countries”.

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At least 30 dead and 100 injured as armed groups clash in Syria, officials say

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At least 30 dead and 100 injured as armed groups clash in Syria, officials say

At least 30 people have been killed in the Syrian city of Sweida in clashes between local military groups and tribes, according to Syria’s interior ministry.

Officials say initial figures suggest around 100 people have also been injured in the city, where the Druze faith is one of the major religious groups.

The interior ministry said its forces will directly intervene to resolve the conflict, which the Reuters news agency said involved fighting between Druze gunmen and Bedouin Sunni tribes.

It marks the latest episode of sectarian violence in Syria, where fears among minority groups have increased since Islamist-led rebels toppled President Bashar al Assad in December, installing their own government and security forces.

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In March, Sky’s Stuart Ramsay described escalating violence within Syria

The violence reportedly erupted after a wave of kidnappings, including the abduction of a Druze merchant on Friday on the highway linking Damascus to Sweida.

Last April, Sunni militia clashed with armed Druze residents of Jaramana, southeast of Damascus, and fighting later spread to another district near the capital.

But this is the first time the fighting has been reported inside the city of Sweida itself, the provincial capital of the mostly Druze province.

The Syrian Observatory for Human Rights (SOHR) reports the fighting was centred in the Maqwas neighbourhood east of Sweida and villages on the western and northern outskirts of the city.

It adds that Syria’s Ministry of Defence has deployed military convoys to the area.

Western nations, including the US and UK, have been increasingly moving towards normalising relations with Syria.

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UK aims to build relationship with Syria

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Read more from Sky News:
UK restores diplomatic ties with Syria
Church in Syria targeted by suicide bomber

Concerns among minority groups have intensified following the killing of hundreds of Alawites in March, in apparent retaliation for an earlier attack carried out by Assad loyalists.

That was the deadliest sectarian flare-up in years in Syria, where a 14-year civil war ended with Assad fleeing to Russia after his government was overthrown by rebel forces.

The city of Sweida is in southern Syria, about 24 miles (38km) north of the border with Jordan.

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Meredith Kercher’s killer faces new trial over sexual assault allegations

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Meredith Kercher's killer faces new trial over sexual assault allegations

The man convicted of the murder of British student Meredith Kercher has been charged with sexual assault against an ex-girlfriend.

Rudy Guede, 38, was the only person who was definitively convicted of the murder of 21-year-old Ms Kercher in Perugia, Italy, back in 2007.

He will be standing trial again in November after an ex-girlfriend filed a police report in the summer of 2023 accusing Guede of mistreatment, personal injury and sexual violence.

Guede, from the Ivory Coast, was released from prison for the murder of Leeds University student Ms Kercher in 2021, after having served about 13 years of a 16-year sentence.

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Since last year – when this investigation was still ongoing – Guede has been under a “special surveillance” regime, Sky News understands, meaning he was banned from having any contact with the woman behind the sexual assault allegations, including via social media, and had to inform police any time he left his city of residence, Viterbo, as ruled by a Rome court.

Guede has been serving a restraining order and fitted with an electronic ankle tag.

The Kercher murder case, in the university city of Perugia, was the subject of international attention.

Ms Kercher, a 21-year-old British exchange student, was found murdered in the flat she shared with her American roommate, Amanda Knox.

The Briton’s throat had been cut and she had been stabbed 47 times.

(L-R) Raffaele Sollecito, Meredith Kercher and Amanda Knox. Pic: AP
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(L-R) Raffaele Sollecito, Meredith Kercher and Amanda Knox. File pic: AP

Ms Knox and her then-boyfriend, Raffaele Sollecito, were placed under suspicion.

Both were initially convicted of murder, but Italy’s highest court overturned their convictions, acquitting them in 2015.

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