FTSE 100 subdued as UK service sector activity declines

<p>The FTSE 100 is failing to make ground in trading after a fresh report revealed the services sector is shrinking.</p>

Activity in the UK's services sector has fallen for the first time in two years, according to fresh data for December, adding to fears the country could be recession-bound once more.

The Markit and Chartered Institute of Purchasing and Supply's official purchasing managers' index (PMI) shows that the industry's reading fell to 48.9 points last month, which is down from 50.2 in November.

PMIs operate using the benchmark of 50 – any figure lower than this is indicative of contraction and therefore this latest report shows the services sector is shrinking after slight growth the previous month.

Markit blamed this latest decline in output on the fall in new business.

Chris Williamson, chief economist at the research company, stated: "The first fall in service sector activity for two years raises the likelihood that the UK economy is sliding back into recession."

At 11:30 GMT, the FTSE 100 was subdued, sliding by a marginal three points to an index value of 6044.2 points.

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