Markets plunge, UK on brink of recession, Australia cuts rates

Markets fell sharply again on Tuesday as the fallout from Greece's proposal for a referendum on its bailout plan continued. The MSCI All-Country World Index fell 3.4 percent while the euro fell 1.2 percent against the US dollar.

Economic data on Tuesday were mixed.

In the UK, an acceleration in economic growth in the third quarter was not enough to ease concerns for the economy. From Reuters:

The economy is teetering on the brink of recession despite a solid performance in the third quarter, increasing pressure on the government to boost growth as renewed turmoil in the euro zone threatens to hit the country hard...

Gross domestic product grew by 0.5 percent on the quarter as business services and finance posted the strongest quarterly increase in four years, the Office for National Statistics said on Tuesday, a notch more than analysts had forecast...

However, the Purchasing Managers' Index (PMI) survey released earlier showed manufacturing activity in October fell at its sharpest monthly rate since June 2009 when Britain was still in recession...

"The third quarter is already history," said Chris Williamson of PMI survey-compiler Markit, which showed a slump in the manufacturing PMI index to 47.4 in October from 50.8.

The US economy appears to be holding up so far though. The ISM's manufacturing PMI fell to 50.8 in October from 51.6 in September, showing continued growth, while construction spending rose 0.2 percent in September.

Manufacturing in Asia also maintained growth in October. The China Federation of Logistics and Purchasing reported that its manufacturing PMI dropped to 50.4 in October from 51.2 in September but HSBC reported that its manufacturing PMI for China rose to 51.0 in October from 49.9 in September. India's manufacturing PMI rose to 52.0 from 50.4, its sharpest increase in three months.

Earlier in the week, Japan had reported a rise in its manufacturing PMI to 50.6 in October from 49.3 in September.

The weaker global economic environment has nevertheless induced many central banks to ease monetary policy recently. The Reserve Bank of Australia became the latest to do so on Tuesday, cutting interest rates for the first time since April 2009 to 4.5 percent from 4.75 percent.