European Markets Mixed as IMF Downgrades Global Growth Estimates

IMF cuts growth estimates for the U.K. by almost 1 percentage point for 2017.
By Lisa Botter ,

European markers ended the day mixed as trading thinned out before the European Central Bank meeting on Thursday and Europe prepares for its summer holiday.

The International Monetary Fund issued a stark warning about global growth post-Brexit.

The fund said that the U.K.'s vote to leave the European Union last month will have a severe impact on economic growth, with economies in the U.K. and Europe hit the hardest. "Brexit has thrown a spanner in the works," said IMF chief economist Maurice Obstfeld.

The IMF said this will put the onus on policymakers to strengthen banking systems and carry out structural reforms.

The IMF said it now forecasts global growth be 3.1% in 2016 and 3.4% in 2017. Both estimates have been cut by 0.1 percentage point. Growth in the U.K. is expected to be 1.7% this year and 1.3% in 2014. That is a decrease of 0.2 percentage point and 0.9 percentage point, respectively, from April estimates.

This comes as consumer confidence in Germany, Europe's largest economy, plummeted in July due to the vote.

Germany's ZEW index of analysts' and investors' economic sentiment in Germany unexpectedly plunged in July to minus 6.8, the lowest reading since November 2012, from 19.2. Their assessment of the current situation also fell more than expected. Respondents' economic sentiment for the eurozone also plummeted deep into negative territory, at minus 14.7, compared with forecasts for a decline to 12.3 from 20.2. ZEW blamed uncertainty surrounding the Brexit vote.

In London, the FTSE 100 gained 0.03% in afternoon trading to close the day at 6,697.37. The FTSE 250 was up 0.22% at 16,904.10.

Miners were a drag on the FTSE 100, however. Rio Tinto (RIO) - Get Report lost 3.8% today, after it announced today that that second-quarter output from its newly created energy and minerals unit declined across most categories, while iron ore production and shipments climbed slightly less than expected.

Miners BHP Billiton (BHP) - Get Report ended the day 3% down and Glencore (GLNCY) lost 3.4% during today's session. BHP announces its quarterly output tomorrow as does Anglo American, which lost 2.2% today. 

In Frankfurt, the Dax was down 0.81% to end the day at 9,981.24 and the Cac 40 lost 0.63% to close at 4,330.13 in Paris.

Steel manufacturer ArcelorMittal (MT) - Get Report lost 3.8% in Paris and cement maker LafargeHolcim (HCMLY) lost 2.1%.

In Frankfurt, Deutsche Bank (DB) - Get Report lost the most on the Dax, dropping 3.1%. And Bayer (BAYRY) - Get Report was down 1.5% after Monsanto (MON) rejected the company's higher takeover offer.

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