Manufacturing gloom: UK factory growth falls to 34-month low - as it happened

All the day's economic and financial news, as manufacturers across the globe suffer a poor February

• Draghi - no limits to measures ECB can take
• Mixed picture from US manufacturing surveys
• UK manufacturers cut jobs as slowdown deepens
• What the analysts say
• France and Germany struggle
• Chinese factories shrink again

6.09pm GMT

The new month has got off to a positive start for stock markets, as investors shrugged off disappointing manufacturing PMI data from China to the UK to the US. Indeed, markets seemed to be more focus on the prospect of more central bank stimulus ahead to boost sluggish global economies or, in the case of the Federal Reserve, a delay in any planned interest rate rise.

Tony Cross, market analyst at Trustnet Direct, said:

That's certainly been a solid start to the month's trade, with the FTSE-100 putting in another impressive day of gains although with downbeat PMI data out of China - and indeed the UK - it's difficult not to be left thinking that the upside has come about only at the expense of promised further stimulus measures.

5.43pm GMT

Global manufacturing PMI falls to 50.2, on the verge of contracting and the lowest since Nov 2012 - JP Morgan pic.twitter.com/BIL7epEASq

5.04pm GMT

Using the closing prices, also likely to be demoted from the FTSE 100 are Smiths Group, Hikma Pharmaceuticals and Aberdeen Asset Managment.

The four replacements as things stand would be Paddy Power Betfair after its merger, hospitals group Mediclinic following a reverse takeover, Morrisons after it was relegated in December at the last review, and Investec.

4.49pm GMT

Mike Ashley's Sports Direct International is being relegated from the FTSE 100 following a Guardian investigation. The demotion is based on tonight's closing price of 410p, down 40% since December, and will be confirmed officially by a committee at index compilers FTSE on Wednesday.

Full story here:

Related: Sport Direct falls out of FTSE 100 following Guardian investigation

4.29pm GMT

#Draghi dovish again, but must fully match words with actions this time. Rate cut >10bp needed to get ahead of curve pic.twitter.com/7E0Z9geQik

4.26pm GMT

The Draghi comments come from a letter sent today in reply to MEP Jonas Fernindez.

4.20pm GMT

ECB president Mario Draghi has added fuel to the expectations that the central bank will unveil further stimulus measures at this month's meeting.

He said the euro area inflation dynamics continued to be weaker than expected, and there are increased risks to the bank's earlier outlook, according to Reuters.

3.50pm GMT

Here's a handy round-up of the day's PMIs:

Global PMIs pic.twitter.com/jHmKevwgaH

3.33pm GMT

Not exactly a convincing recovery is the view of Rob Carnell, chief international economist at ING Bank, on the ISM figures:

The February Institute of Supply Management (ISM ) manufacturing index rose to 49.5 from 47.8 in January. This means that manufacturing is likely to be expanding at a slightly stronger pace than it was in January.

But slightly stronger is still a long way from robust. Typically, we see an index of 50 or above as necessary to indicate growth at an acceptable rate, whilst 43.2 is the historical break-even index for contraction or expansion.

3.27pm GMT

And there we have it: ISM mfg reverts back closer to Markit. ISM still much more volatile/exaggerated on mfg pic.twitter.com/ZsifQyWesu

3.25pm GMT

Here are some of the respondents comments to the ISM:

3.19pm GMT

The Federal Reserve's dilemma:

Markit: "The February data add to signs of distress in the US manufacturing economy"
ISM: "US Manufacturing may have found a bottom"

3.11pm GMT

David Morrison at Spread Co said:

The US ISM Manufacturing PMI beat the consensus expectation by quite a distance. Nevertheless, it wasn't enough to register expansion in a sector which has been declining for over a year now.

Earlier today China's Manufacturing PMIs continued to show contraction in the sector. On top of that, there was an unwelcome dip in the country's Non-Manufacturing PMI as well, suggesting that the hoped-for rebalancing from manufacturing and exporting to consumer demand may not be going as well as hoped.

3.06pm GMT

US construction spending is also stronger:

US Construction Spending M/M (Jan) +1.5% versus +0.3% expected, previous +0.1% revised to +0.6%

3.04pm GMT

And by contrast with the Markit PMI, the manufacturing activity index from the Institute for Supply Management has come in higher than expected.

The index came in at 49.5 in February, up from 48.2 in the previous month and better than the 48.5 forecast. This is the highest level since September.

2.57pm GMT

Chris Williamson, chief economist at Markit said:

The February data add to signs of distress in the US manufacturing economy. Production and order book growth continues to worsen, led by falling exports. Jobs are being added at a slower pace and output prices are dropping at a rate not seen since mid-2012.

The deterioration in the manufacturing sector's performance since mid-2014 has broadly tracked the dollar's rise, which makes US goods more expensive in overseas markets and leads US consumers to favour cheaper imported goods.

With other headwinds including the downturn in the oil sector, heightened uncertainty due to financial market volatility, global growth worries and growing concerns about the presidential election, it's no surprise that the manufacturing sector is facing its toughest period since the global financial crisis.

2.50pm GMT

Final Markit US Manufacturing #PMI at 51.3, up slightly from flash reading of 51.0 but still 2nd-lowest since Oct'12 https://t.co/cwVYMc2t5o

2.48pm GMT

US manufacturing performed marginally better than expected in February but worse than in January.

The Markit manufacturing purchasing managers index came in at 51.3 last month, higher than the initial estimate of 51 and the forecast of 51.2. But it was down on the final figure for January of 52.4.

2.38pm GMT

Ahead of the US manufacturing figures for February - remember there is the Markit PMI followed shortly afterwards by the ISM survey - Wall Street has climbed sharply in early trading.

The Dow Jones Industrial Average is up 93 points or 0.6% while the S&P 500 has opened up 0.5% and Nasdaq up 0.8%, as the oil price shows signs of stabilising.

1.55pm GMT

Time for a very quick summary.

Britain's factory sector has posted its slowest growth in almost three years. UK manufacturers have been hurt by the weakening global economy and signs of domestic slowdown, and economists fear further problems ahead.

1.45pm GMT

The financial market turmoil of 2015 has knocked around 50bn off the value of the world's 20 wealthiest people.

That's according to the annual survey of the megarich from Forbes , which reports that Carlos Slim, the Mexican telecoms tycoon, had a year to forget. His fortune shrank from $77.1bn to $50bn last year.

Bill Gates has been crowned the richest man in the world for the third year in a row, although the Microsoft founder's fortune also dipped from $79.2bn to $75bn.

Zuckerberg's wealth grew by $11.2bn to give him a total net worth of $44.6bn.

Related: World's 20 richest people are $70bn poorer, says Forbes

1.29pm GMT

Here comes the first slug of economic data from across the Atlantic.... and it show that Brazil's factory sector shrank at a rapid pace in February.

The Brazilian manufacturing PMI, which measures activity at hundreds of firms, fell to a three-month low of 44.5 in February, from 47.4 in January. That's the second-fastest contraction since the financial crisis in 2008.

Brazil's manufacturing recession extended to February, with a further drop in incoming new work leading companies to lower production and cut jobs again. Such was the extent of the downturn that firms shed jobs at the second-fastest pace since April 2009.

The weaker real continued to exert upward pressure on input costs, which rose at quickest rate since October 2008. Subsequently, tariffs were raised again, with charge inflation reaching a survey peak.

Downturn in #Brazil's manufacturing sector continues in Feb: #PMI falls to 44.5 (Jan: 47.4) https://t.co/Px6V50otH2 pic.twitter.com/TBGVMxQDRp

#Brazil mfg: "The latest #PMI data showed the strongest rise in costs since global financial crisis, while charge inflation reached a peak"

1.10pm GMT

It's a historic day in the financial markets. For the first time ever, investors have paid Japan for the privilege of lending to it for the next decade.

Japan becomes the first G7 country to auction 10-year bonds at a negative yield: https://t.co/RoSsNbxcB2

12.26pm GMT

It's lunchtime in the City of London, after a morning of generally downbeat economic news.

But shares are still up, though. The FTSE 100 has gained 45 points or 0.75% to a two-month high.

European markets have a spring in their step this morning, with the FTSE hitting an eight-week high in early trade.

The initial anxiety brought about by yet another batch of disappointing Chinese PMI readings overnight proved unfounded, as the slowdown story begins to play less of a role in global sentiment.

US Opening Calls:#DOW 16631 +0.73%#SPX 1946.57 +0.81%#NASDAQ 4234.9 +0.83%#IGOpeningQuote

11.56am GMT

Wondering where you should have invested your hard-earned money (or your clients') last month?

Deutsche Bank has the answer. You should have piled into gold on February 1st, when bullion was $1,128 per ounce. It's now $1,245 per ounce, up 10%.

Separating the wheat from the chaff - long gold/short wheat was your winning strategy for February. Via Deutsche: pic.twitter.com/5WGVdn9zCL

11.33am GMT

Legal & General, the UK's biggest asset manager, has just issued a statement on Britain's In-Out EU referendum, scheduled for June 23.

We consider that a vote to leave would have little direct impact on trading for Legal & General: our customer base is located very largely in the UK, the US and Asia.

It is however probable that a vote to exit, with a potentially lengthy period of negotiation and an uncertain outcome, would create uncertainty for markets and the broader UK economy in which we operate.

As one of the largest investors in the UK, we will be actively listening to companies we invest in, who will be assessing the potential impact for themselves.

Nigel Wilson, L&G's CEO, has made the most eurosceptic comments of any FTSE 100 CEO (WSJ broke this story: https://t.co/YvgXqMv4BI)

But this statement is on behalf of the whole board... read into that what you will.

11.13am GMT

Alan Greenspan was notoriously opaque when he was the world's top central banker, joking once that "If I seem unduly clear to you, you must have misunderstood what I said."

"I wouldn't say dangerous, but it is clearly not productive."

"The big argument about excessively low interest rates for a very long period of time is that it warps the investment pattern on real investments."

Output per hour is driven essentially by real capital investment, and it's way below average, because business people are very uncertain about the future.

#Greenspan: We're in trouble.

10.41am GMT

The sharp slowdown in UK factory growth last month has disappointed analysts.

They are worried that domestic demand weakened in February, compounding the impact of weaker demand from overseas. And the EU referendum could weigh on the sector for several months too.

"After an encouraging start to 2016, the manufacturing PMI took a turn for the worse in February, falling to its lowest level in nearly three years and barely remaining in growth territory.

"Activity levels deteriorated on the back of weakness in new orders, with domestic demand no longer compensating for lacklustre export orders. The weakness led manufacturing to post job losses for the fifth time in the last seven months. On a brighter note, the weakness was not across the board as new orders for intermediate goods edged higher.

"The weak start to the year continues for the manufacturing sector with even domestic demand unable to contribute to the levels it has done previously.

However, amidst the headwinds of slowing global growth, uncertainty over a Brexit and skills shortages in the industry comes the recent depreciation in sterling which may just provide the jump-start that manufacturing exporters need to boost exports and put a spark back into the sector's performance."

Domestic demand has been the key driver of UK manufacturing in recent months. But with households showing some Brexit jitters too, UK manufacturing might be heading for a rough time until the referendum is out of the way.

As long as the UK votes to stay in the EU, domestic demand will likely pick up again thereafter. If the UK votes to eject itself from its biggest market, things may get much rougher, though.

10.07am GMT

The unemployment rate across the eurozone has hit its lowest level since August 2011, the early months of the debt crisis.

The eurozone jobless rate ticked down to 10.3% in January 2016, down from 10.4% in December 2015, for the first time since August 2011.

Jan 2016: euro area unemployment rate 10.3% (Dec 15 10.4%), EU 8.9% (Dec 15 9.0%) #Eurostat https://t.co/NAPHS6eVxT pic.twitter.com/31vsMBxFWF

9.55am GMT

UK factories do have one glimmer of hope -- the recent slump in the pound.

Today's report was conducted before Brexit firms sent sterling down to new seven-year lows, which ought to help exporters....

UK manufacturing PMI survey took place between 12-24 Feb. Sterling started really shifting lower on the 22nd so no help there

9.49am GMT

Barclays shares are being hammered harder, after it reported an 8% fall in profits, halved its dividend and warned of further job cuts.

They fell 11% a moment ago, forcing trading to be briefly suspended.

#Barclays shares halted in London on volatility after 11% drop

9.38am GMT

More gloom! Britain's factories have posted their slowest growth in almost three years, as the nation's manufacturing sector slipped to near-stagnation.

Data firm Markit's monthly healthcheck of the sector showed that output slowed sharply, as exports suffered from weakness in the global economy.

"The near-stagnation of manufacturing highlights the ongoing fragility of the economic recovery at the start of the year and provides further cover for the Bank of England's increasingly dovish stance.

"The breadth of the slowdown is especially worrisome. The domestic market is showing signs of weakening while export business continued to fall. Price pressures also remained firmly on the downside, with the survey signalling input costs falling at a double-digit annual pace and average factory gate selling prices showing a further decline. A lot of this is driven by the ongoing weakness of global commodity prices.

9.20am GMT

European stock markets are taking today's weak manufacturing data in their stride.

Britain's FTSE 100 just touched its highest point since the 5th of January, with mining group Anglo American and fashion chain Burberry among the risers.

China's #PMI manuf just fell to a new 5Y low. Remember the time when this kind of release spooked Europe's equity markets? All green today.

9.09am GMT

It's official: Europe's manufacturing sector expanded at the slowest rate in a year last month, fuelling fears that its economy is heading into trouble.

The latest Purchasing Managers Index reports, based on data from thousands of firms, shows that the eurozone's factory sector only expanded modestly.

"Lacklustre domestic demand is being compounded by a worsening global picture. Exports either fell or rose more slowly in all countries surveyed with the sole exception of Austria.

"For a region in desperate need of lower unemployment, the near-stalling of jobs growth in the manufacturing sector comes as disappointing news. Firms are cutting back on their hiring due to worries about the outlook.

8.57am GMT

Growth in Germany's factory sector has ground to a near-halt, according to Markit.

The German manufacturing PMI slowed sharply to 50.5, a 15-month low, from 52.3 in January. New orders, and new exports, both dipped to the slowest growth since last summer.

8.54am GMT

France's manufacturers remained in near-stagnation last month.

The French PMI came in at 50.2, up from 50.0 in January - which showed no growth at all.

"Falling new orders were again the source of weakness, leading firms to cut production levels slightly.

Meanwhile, the survey's price indices point to continued downward pressure on already low inflation."

8.50am GMT

Italy's factory sector didn't enjoy a great February.

The Italian manufacturing PMI has fallen to 52.2, from 53.2 in January. That's the lowest reading in a year, signalling that growth last month.

8.43am GMT

The first European PMI reports are out.

The Dutch manufacturing sector has reported its slowest growth in 18 months, with the PMI dropping to 51.7 from 52.4.

(2) @Markit's #Spanish #PMI down to 54.1 in Feb from 8-month high of 55.4 in Jan. New orders growth "solid". Employment at 7-month high

8.36am GMT

Chinese investors have taken today's weak factory data in their stride.

The Shanghai composite index closed 1.7% higher, on hopes that Beijing will heed calls for more stimulus measures.

8.33am GMT

Back to China....and Beijing is reportedly planning to cut up to six million workers from failing companies.

The sackings are part of the government's attempts to clear out its economy and remove excess capacity.

China aims to lay off 5-6 million workers from "zombie enterprises" over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two sources with ties to the country's leadership said.

Beijing is trying to rejuvenate its flagging economy by streamlining bloated industrial sectors, starting with coal and steel, but layoffs have emerged as one of the biggest concerns for cash-strapped regions ahead of next week's annual session of parliament.

8.26am GMT

Few things get our blood pumping faster than a takeover battle. And we might have one brewing, over the London Stock Exchange.

Shares in the LSE have soared by 8% in early trading, after rival US operator Intercontinental Exchange (ICE) said it was considering a bid for the LSE.

8.10am GMT

Shares in Barclays have shed 4% at the start of trading, as traders give their verdict to today's results.

The bank is briefing reporters now:

New Barclays boss Jes Staley says a hiring freeze he announced when he arrived - Dec 1 - has led to 5,700 cut in headcount

Barclays CEO Jes Staley's pay package for his first month in the job: 277k. Sacked CEO Antony Jenkins gets 505k bonus, 3.4M for the year.

Barclays CEO Staley says to sell down 62% Barclays Agrica stake, but would be happy to keep a minority stake in Africa biz

8.02am GMT

Russia's factory sector continued to deteriorate last month.

The Russian manufacturing PMI fell to 49.3 in February, down from 49.8 in January, showing a sharper slowdown.

Disappointingly for goods producers, scrutinising the survey data leaves little encouraging news. Workforce numbers continued to slide while outstanding business was depleted at a sharp pace.

#Russia manufacturing PMI in February 49.3, down from 49.7, contraction continues

7.51am GMT

Barclays has hit investors with some bad news.

The bank is more than halving its dividend, from 6.5p to 3p, after suffering and 8% drop in pre-tax profits.

Chief executive Jes Staley, making his first announcement since taking the helm in December, said he was "announcing initiatives to accelerate our strategy and simplify the group" as profits fell 8% to 2.1bn in 2015.

Staley said the bank would reduce its stake in its African business - which expanded in 2005 when it bought South African bank Absa - and reduce its payout to shareholders.

Related: Barclays cuts dividend as profits fall 8%

Crucial that @Barclays cutting dividend 2016 &2017...this likely to push shares lower today

7.46am GMT

Dr. He Fan, Chief Economist at Caixin Insight Group, says today's PMI report shows that Beijing needs to take more action, fast.

"The Caixin China General Manufacturing PMI for February is 48, down 0.4 points from the previous month. The index readings for all key categories including output, new orders and employment signalled that conditions worsened, in line with signs that the economy's road to stability remains bumpy.

The government needs to press ahead with reforms, while adopting moderate stimulus policies and strengthening support of the economy in other ways to prevent it from falling off a cliff."

China PMI manufacturing index weak in Feb, dipping to 49, lowest since Nov 2011, vs 49.4 in Jan. Another factor explaining policy easing.

Chinese PMIs were predictably weak and while no doubt affected by the seasonal disruptions of Chinese Lunar New Year (LNY), the trend of late was pointing to further weakness in any case.

In the NBS Manufacturing PMI, the key components of output and new orders both wilted dramatically. Probably of most concern was the renewed collapse in the small companies component, which contracted to 44.4. This emphasises the fact that despite the huge growth in credit in January, most of it is going to the large state-connected corporates while small and medium sized private enterprises continue to struggle.

7.44am GMT

Confusingly, China actually has two PMI reports -- the Caixin one which is so gloomy this month, and a separate survey conducted by the government.

And that official PMI confirms that the factory sector shrank last month:

China's official manufacturing purchasing managers' index fell to 49 in February from 49.8 in January, equalling its weakest since February 2009 and the seventh straight month of decline. The National Bureau of Statistics, which released the measure, said this was partly due to seasonal effects of the lunar new year holiday, when many factories shut down for extended periods to allow workers to travel to distant hometowns to spend time with their families.

The official services sector PMI, which had previously held up better than the manufacturing index in China's economic slowdown, also slipped last month to 52.7, its weakest level since December 2008.

7.36am GMT

China's economy has suffered another jolt, with its manufacturing sector shrinking at a faster pace and cutting jobs at the fastest rate since the depths of the financial crisis.

It's a bad start to PMI Day, painting a pretty grim picture of the world's second-largest economy.

7.20am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Today's latest February manufacturing PMI numbers from Spain, Italy, France and Germany are expected to reinforce concerns of a gradual manufacturing slowdown, with both the German and French measures expected to show stagnation.

The latest UK manufacturing PMI numbers are expected to show further weakness, down from 52.9 to 52.3, though recent sterling weakness might help on the margins.