"A return to contraction for the UK is on the cards in Q4"
- Rob Wood, economist at Berenberg Bank
Activity in the U.K. service sector grew at its slowest pace since December 2010, diminishing hopes the economy is recovering. Markit/CIPS Services Purchasing Managers Index dropped to 50.6 in October, down from a reading of 52.2 in the previous month. As both manufacturing and service sectors decelerated in October, a sign nation's economy may shrink in the last quarter of 2012.
"A return to contraction for the UK is on the cards in Q4," said Rob Wood, economist at Berenberg Bank who worked at the central bank until recently.
"I think they will either do more asset purchases or an alternative stimulus, along the lines of the Funding for Lending Scheme, sometime next year," he added.
"With activity rising at the weakest pace in close to two years, the broadly stagnant trend seen in official data over the year to date looks to have continued at the start of the fourth quarter," Andrew Harker, economist at survey compilers Markit, said on Monday.
The FTSE 100 Index inched lower 0.50 per cent to 5,839.06. The broader FTSE All-Share Index retreated 0.53 per cent to 3,052.42.
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