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UK manufacturing PMI falls unexpectedly

UK manufacturing PMI falls unexpectedly

British manufacturing shrank unexpectedly in February and new orders dwindled, a survey shows today, making it likely the sector will put a drag on economic growth in the first quarter. In the last quarter of 2012, a plunge in factory output shaved 0.1 percentage point off economic growth, contributing to a drop in gross domestic product. However, Chris Williamson said there were good reasons to believe manufacturing could recover in March, noting that the weaker pound might help exporters, while factories were also hit by disruption to deliveries from bad weather in late January.

Meanwhile, the Euro neared a seven-week low against the dollar on Friday as concerns about political uncertainty in Italy outweighed better-than-expected Spanish manufacturing data. The impending risk of U.S. government spending cuts and some speculation the European Central Bank may cut interest rates at a policy meeting next week also curbed demand for the single currency. Traders said benign Euro zone inflation data on Thursday would give the ECB room to cut interest rates, which further diminished the allure of the Euro.

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