(July 22 Bloomberg) European stocks fell and the pound slid as reports showed the first signs of economic weakness in the wake of the U.K. vote to leave the European Union.
The Stoxx Europe 600 Index retreated for a second day after the euro area's service sector cooled in July while the pound dropped for the first time in three days after business activity in Britain shrank at its fastest pace since the financial crisis. A gauge of commodities fell for a sixth day as oil headed for a weekly decline. The dollar gained.
Equity markets in Europe and Asia pared gains after a rally added more than $4.5 trillion to the value of global stocks in three weeks amid speculation central banks would take steps to protect economies against a Brexit fallout. In Asia, a growing number of officials at the Bank of Japan were said to be concerned about the use of massive monetary easing and European Central Bank chief Mario Draghi refrained from adding stimulus on Thursday, while stressing a readiness to act if necessary.
"European stocks are finding it difficult to maintain gains as investors remain concerned on the prospects for economic growht in the euro zone after Brexit," said Arno Endres, head analyst at Luzerner Kantonalbank in Switzerland. "The non-action of the ECB yesterday was no a surprise but the confidence level will be a problem longer term because overall central banks are running out of ammunition."
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