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Bank of England Governor Mark Carney made it clear yesterday that the commercial property market is one of the risks to the UK economy.  

Lucian Cook, director of residential research at Savills, tells Today the outlook for the UK residential market is weaker. 

"In the longer term there's just uncertainty about what the wider economic environment will be and what that means for the housing market. I think critically importantly is what happens to interest rates, which is often the main determinant of house prices and there currently we're talking about cuts in bank base rate," he says.

"That could be offset by increases in lenders' margins but certainly not the spiralling interest rates which would cause, for example, significant levels of repossession which would push house prices into negative territory. It looks like it's going to be much more benign than that." 

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More new record lows for government bond yields on the continent, with the return on German 10-year notes sinking to minus 0.188%, while yields on the country's 30-year bonds slipped more than 2 basis points to 0.317%. 

France's 10-year bond yield fell as low as 0.13% and the Dutch equivalent remained close to zero.

Owen Callan, an analyst at Cantor Fitzgerald, said: "Markets hate uncertainty so there is a push towards safe havens. If things get bad and the economy weakens, central banks are likely to act quickly, so this expectation is also supporting bonds." 

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The FTSE 100 has changed course and is now up 0.3% at 6,569 points, with the miners leading the risers. Connor Campbell at Spreadex attributes the rise to the prospect of cheaper exports.

It's a different story on the FTSE 250 though, which has fallen almost 0.4%, dragged down by an 11% slide in Tullow Oil and a 7% decline for Metro Bank. Redrow and DFS are also among the biggest fallers.

The mid-cap index has fallen 10% since the EU referendum vote. 

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Final word on Royal Bank of Scotland: the bank faces a fine of up to $9bn in the US where it's facing outstanding litigation This could be all the more painful given the dollar's strength.    

Chairman Sir Howard Davies says RBS has hedged against the fine: "We don't know exactly what the fine will be but we have taken out some protection. I'm not going to tell you precisely how much, but we did notice this, yes."

RBS shares have slipped another 2.5% so far today to 154.6p, bringing the fall this year to 48%. Ouch.

Melrose is one of those FTSE 250-listed companies you may not have heard of, but is actually quite interesting. The "engineering turnaround" specialist has announced a $1.4bn (£1.1bn) deal to buy Nortek, a US residential products maker. 

Melrose adopts a "buy-improve-sell" model akin to that used by private equity firms and has been searching for a deal since selling its gas and electric meters business to Honeywell last year. 

The deal will give Melrose access to Nortek's large exposure to the North American ventilation and home security products market at a time when the US construction market is on the up. 

Investors certainly approve - Melrose shares have bounced 23% in early trading in London.

Dan Macadam
Business reporter

Spot of corporate news for a change: Booker Group, the UK’s biggest cash-and-carry wholesaler, has reported a 0.7% decline in like-for-like sales (excluding tobacco) in the three months to 17 June.

The FTSE 250 company said sales were hit by food price deflation and weaker consumer demand.

Tobacco sales dropped 7.7% because of the ban on small stores displaying cigarettes.

Including local grocery stores Budgens and Londis, which Booker acquired for £40m last year, the group increased sales by 10%.

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Taxpayers still own a 73% stake in RBS and chairman Sir Howard Davies admits that they have lost "quite a lot of money" given the fall in RBS shares since the EU vote. 

He admits that slide means the government's plan to sell more shares in RBS is likely to be delayed.

"They were planning to sell down most of their stake between now and the next election - which is what George Osborne said - but obviously the government cannot ignore the price, and it would not be a great time to sell a large piece of a bank at the moment into a falling market, so I think one can deduce that that is likely to be later rather than sooner," Sir Howard says.

The FTSE 100 is down 0.2% at 6,532 points at the open.

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Shares in Royal Bank of Scotland have fallen sharply since the EU referendum vote - down from about 250p to 160p. Dominic O'Connell ask chairman Sir Howard Davies why investors have turned their backs on the bank.

"If you look at the way bank shares have reacted since the referendum vote it's clear that those banks that are particularly exposed to the UK economy specifically have been the ones that have suffered the most and that's the Royal Bank of Scotland and Lloyds primarily.

"So investors are saying there's going to be a slowdown in the UK economy. That is particularly bad for banks most of whose business is in the UK, which is now true of Royal Bank of Scotland," Sir Howard says.

"Other banks like HSBC who've got foreign earnings in dollars or yuan or Hong Kong dollars have been cushioned from that effect, but if you are a mainly UK bank you cannot hide from what's going on in the UK economy. Indeed if you did you'd make it worse because if we then pulled in lending in the UK to protect ourselves from losses that would make things worse."

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Today business presenter Dominic O'Connell asks Sir Howard Davies whether freeing up an extra £150bn of bank lending capacity announced by the Bank of England yesterday will actually make much difference and whether there was a demand for it.

"The Governor did say that the key is what the demand for lending is," says Sir Howard. 

"Last time we had a problem in that demand for lending fell, but also supply fell, because the banks had too little capital and so they were trying to build up their reserves in order to survive. That is not the position today and so I think it's primarily a demand issue at the moment." 

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The chiefs of eight big banks met the Chancellor, George Osborne, on Tuesday and agreed to provide more loans to households and businesses.

Sir Howard Davies, chairman of the Royal Bank of Scotland, was in the room. So what was the mood like?

Mr Osborne asked about demand for lending and "we were able to tell him that the position is not so bad, but there is some slowdown, particularly in the property market and particularly where you have overseas investors and particularly in London".

The chancellor also wanted to know if the banks were "open for business", says Sir Howard. 

"To which we can honestly say yes - we are not under strain from a capital point of view, we have money to lend." 

Today business presenter Dominic O'Connell tweets:

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Gold jumped and oil fell on Brexit worries on Wednesday, with the precious metal surging as high as $1,371.40 an ounce - the highest since March 2014.

And after falling almost 5% on Tuesday, Brent crude fell further to $47.84, with US crude at $46.43 a barrel. 

Just to add to the gloom, yields on US government bonds hit new record lows. The 10-year bond offered a yield of just 1.35% and investors were willing to pay the Japanese government 0.27% to lend it money for a decade. 

"There's no inflation prospects, there's no strong growth. The only thing we have is uncertainty," said Hiroko Iwaki, senior bond strategist at Mizuho Securities. 

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Today Programme
BBC Radio 4

Today business presenter Dominic O'Connell asks Rathbone investment director, Jane Sydenham, about the commercial property funds run firms by Standard Life, Aviva and M&G that have stopped investors taking money out. 

Could this be a systemic threat? "It doesn't mean there's disaster coming," she says.

But what is Ms Sydenham's advice for average investors faced with the possibility of interest rates falling, the pound going down and property assets looking 'iffy'?

"It's always the same: if you've got plenty of cash to get you through the difficult times then you can afford to hold on," she replies. 

"As long as they're  good quality investments you should hold on. The issue about stock markets is they're always volatile. Prices go up and down in times of stress, but you should hold on unless you're forced to raise cash, which is entirely different." 

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The pound's continued slide has been attributed in part to concerns that Brexit may cause a crash in UK commercial property values and hurt the wider economy. 

Angus Nicholson, a market analyst at IG in Melbourne, said: "Mark Carney, almost the only British leader who seems to not be resigning at the moment, emphasised the challenges the UK economy will suffer in the post-Brexit world. Carney's speech seems to have initiated the dawning of realisation of the longer-term impact of Brexit for many in the markets." 

Like Tokyo and Hong Kong, other Asian stock markets fell on Wednesday, with South Korea's Kospi down 2.1% and Australia's ASX 200 1.3% lower. 

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The big business story yesterday was the Bank of England easing capital requirements for banks, allowing them to dip into their rainy day reserves and potentially freeing up £150bn for lending.

On the Today programme Huw van Steenis, head of European banks research at Morgan Stanley, is asked why Bank of England Governor Mark Carney is focusing on the banks.

He "wants to ensure that banks are part of the solution, not part of the problem", Mr van Steenis says. 

During the financial crisis banks simply were not resilient enough, whereas these days they have more reserves and are better funded, he adds. 

But is there likely to be demand for banks' extra lending capacity? "I imagine demand will be somewhat lacklustre."    

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The yield on the 20-year Japanese government bond turned negative for the first time on Wednesday as investors sought safe havens as the Brexit fallout continues. 

The 20-year yield fell to minus 0.005%, underlining the hit investors are willing to take to keep their money in rock-solid government debt. 

The uncertainty sent the yen - also regarded as a safe haven - higher against the dollar. A stronger yen is bad for Japanese exporters' profitability, however.  

"The UK's economic outlook is blurred with uncertainty," Mitsuo Shimizu, deputy general manager with Japan Asia Securities Group. "The pound's recent weakness is likely to encourage speculative buying in the yen." 

It could be another torrid day on European markets, with the FTSE 100 expected to open 0.3% lower, according to spreadbetters at IG and London Capital Group. The DAX in Frankfurt may open 1.2% lower, while the CAC in Paris may sink 1%. 

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Three commercial property funds aimed at retail investors have now suspended withdrawals. Guy Grainger of property agents JLL says property can be an "emotional investment" and there are no signs that institutional investors are wanting to pull their money out of the sector. 

He tells Wake Up to Money that some of these funds have made very good returns in recent years and some investors have decided to cash in. 

Prices for these assets, which include retail, office and industrial property, are high in the UK, Mr Grainger says. The demand for withdrawals from these funds will spark some sales and that will give a benchmark for values, he adds.