Murdoch junior will be quizzed on his closeness to political figures, says Reuters correspondent Georgina Prodhan.

She writes: "James Murdoch, 39, will face questions about meetings with ministers while they considered letting the Murdochs take full control of broadcaster BSkyB and also about a Christmas drinks party he attended with Prime Minister David Cameron, who may also soon face awkward questions from an inquiry he himself set up in response to public outrage at tabloid misbehaviour.

The younger Murdoch, who stepped down this month as chairman of BSkyB, may be asked whether the family political influence his Australian-born father had built up over four decades may have contributed to a sense of invulnerability among the tabloid journalists accused of hacking voicemails to break stories."

Read Georgina's full report

Here we go - got your pies ready?

BBC's Robert Peston tweets: "James Murdoch arrives with enormous black hold-all full of papers. If he can find what he needs from there, I will be impressed"

Murdoch tells the inquiry he resigned as chairman of BSkyB "for the simple reason that I wanted to avoid becoming a lightening rod."

Jay then asks Murdoch if Colin Myler, former editor of the News of the World, was open with him in December 2007. Murdoch says he had no reason to believe otherwise.

Murdoch is asked why he hired Dominic Mohan as Sun editor. James says Mohan was recommended by both Rebekah Brooks and Rupert Murdoch.

James Murdoch lapses into management speak at #leveson -- couldn't "situate" Taylor's payout with legal position

Murdoch met with Myler and Crone on June 10 2008 to about the Taylor settlement. Murdoch says Myler and Crone were "more on the anxious side" at this meeting, it was a short meeting and he left the settlement to them.

Asked if he knew that Myler thought Taylor was going to attempt to blackmail News International (by revealing that hacking was rife at the organisation), Murdoch says:

"If the purpose of that meeting was to bring me up to speed on the whole story, then a) it would have been a much longer meeting and b) it would have had a different outcome"

Towards the end of that first session, lead counsel Jay tells Murdoch that what went on at News International was either a cover up or a failure of governance.

Andrew Neil, presenter of the BBC's This Week programme, tweets: "Taylor was football not royalty. His case was to cost a fortune to settle secretly. Both clear signs rogue reporter defence wrong."

Jay asks Murdoch about meetings he had with PM David Cameron back in 2006-2008, when Cameron was leader of the opposition.

He would have been interested to meet Cameron and to learn his views and was flattered to be invited but not for the purpose of doing business, Murdoch says. They were just social events and dinners, he adds.

Murdoch denies that meetings with Cameron were of "commercial advantage" to News International.

Jay asks Murdoch about a drinks meeting with Cameron during which the two discussed the Sun newspaper's possible endorsement of the Conservative Party ahead of the last general election.

James Murdoch, at a dinner at Rebekah Brooks, told Cameron he hoped handling of BSkyB bid would be "appropriate and judicial" #leveson

Moving on to News Corp's bid for all remaining shares in BSkyB, Murdoch says he discussed the topic briefly with the PM at the home of Rebekah Brooks in December 2010. Murdoch, however, also says the discussion only lasted a "few moments."

Jay asks Murdoch about his relationship with culture secretary Jeremy Hunt about News Corp's BSkyB bid. Was Hunt a "huge ally" of News Corp? "I wouldn't think so," says Murdoch.