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London stocks slip on global woes, UK recession fears

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FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville/File Photo

London stocks fell further Thursday as global economic growth worries were compounded by fears that Britain could be heading into recession just as it prepares to leave the European Union.

The British capital’s benchmark FTSE 100 shares index was down 0.6 percent at the close, as survey data showed the pivotal services sector shrank last month.

The stock market decline added to Wednesday’s plunge of more than three percent.

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“The FTSE 100 is back in the red… as fears over the global growth picture and a tit-for-tit trade war between the US and EU continue to dent sentiment,” said IG analyst Joshua Mahony.

Earlier, sentiment soured in Asia after a below-par US jobs report stoked worries about the world’s top economy, while the WTO fanned fresh trade war fears by allowing Washington to impose new tariffs on the European Union.

In contrast, continental European markets rose as investors fished for bargains after this week’s selloff. Frankfurt, however, was shut for a holiday.

‘Not much to cheer’
In Britain, fresh data sparked concern that the country could be heading for recession, defined as two successive quarters of economic contraction.

The IHS Markit/CIPS UK services purchasing managers’ index (PMI) showed a reading of 49.5 in September, down from 50.6 in August. A figure below 50 indicates contraction, while above signals growth.

The services report follows PMI surveys which showed that output also fell across both construction and manufacturing.

“With downbeat data pouring in from all angles and across both sides of the Atlantic, investors are struggling to find much to cheer,” said City Index analyst Fiona Cincotta.

“PMIs proved to be a hat-trick of disappointment; the UK is almost certainly heading towards recession in the third quarter,” she told AFP.

The data came one day after Prime Minister Boris Johnson issued his “final” Brexit proposals and warned that Britain would leave the EU without a deal on October 31 if they were not accepted.

‘Adding to pullback’
On Wall Street, the DJIA was slightly lower in the late New York morning, having earlier tried, and failed, to regain firmer ground after the previous day’s sharp decline.

“US stocks are slightly adding to a recent pullback,” said analysts at Charles Schwab, blaming trade tensions and economic concerns.

On Friday, non-farm payrolls data will be closely watched for a gauge on the health of the economy.

Just as Washington and Beijing prepare for high-level trade talks this month, the WTO provided markets with a fresh headache by ruling that the EU had given illegal support to plane-maker Airbus, allowing the US to impose billions in tariffs on the bloc.

– Key figures around 1540 GMT –
London – FTSE 100: DOWN 0.6 percent at 7,077.64 points (close)

Paris – CAC 40: UP 0.3 percent at 5,438.77 (close)

Frankfurt – DAX 30: Closed for a public holiday

EURO STOXX 50: UP 0.1 percent at 3,417.37

New York – Dow: DOWN 0.2 percent at 26,030.51

Tokyo – Nikkei 225: DOWN 2.0 percent at 21,341.74 (close)

Hong Kong – Hang Seng: UP 0.3 percent at 26,110.31 (close)

Shanghai – Composite: Closed for a public holiday

Euro/dollar: UP at $1.0990 from $1.0959 at 2100 GMT

Pound/dollar: UP at $1.2401 from $1.2303

Dollar/yen: DOWN at 106.78 yen from 107.18 yen

Brent North Sea crude: DOWN 0.8 percent at $57.25 per barrel

West Texas Intermediate: DOWN 1.2 percent at $51.99

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