Rolling business and financial news, as Britains factories are hit by the weakening eurozone economy and Germanys manufacturing output fallsOur latest summary 11.18am BST Time for a recap.The weak eurozone economy is dragging back Britains factories, experts say, after growth in the UK manufacturing sector fell to its lowest in 17 months.Even with the continued strength of the domestic economy, the manufacturing sector looks set to end 2014 on a disappointing note. Exporters are likely to continue suffering from the strength of sterling. The pounds drop in early September was short-lived, with sterling appreciating by over 2% during the course of the month. And further signs of weakening sentiment in the euro-zone wont help exporters endeavours either.In a sign of spreading economic malaise, Germany, Austria and Greece all joined France in reporting manufacturing downturns in September. Whats especially perturbing is that Germanys PMI fell into contraction for the first time since June of last year, suggesting the regions northern industrial heartland has succumbed to the various headwinds of weak demand within the euro area, falling business and consumer confidence, waning exports due to the Ukraine crisis and Russian sanctions. 11.10am BST Another sign that all is not quite right in the global economy - Germany just sold 10-year sovereign debt at an interest below 1%.In an auction this morning, the German debt office sold 4.1bn of 10-year bunds at an average yield of just 0.93% (!).RT @RobinWigg: Germany sells 10-year bond below 1% yield for first time on record. http://t.co/7y5Bc0lj3o pic.twitter.com/Dxw7q5v5ji 10.46am BST And heres Mike Rigby, head of manufacturing at Barclays, on the UK factory data:After a promising start to Q3, the growth of output and new orders continues to slow bringing a subdued outlook to the end of the quarter. Although the sector is still expanding, manufacturers are holding off raising investment levels until the economic picture, in particular the way forward on interest rates, becomes clearer. That said, its crucial that the sector continues to invest in new product lines, innovation and manufacturing efficiencies. 10.38am BST However, the pound has actually risen slightly against the euro today, to 1.2844.Not a surprise, given that the eurozone factory data was disappointing too (details here), but it wont help UK firms boost exports. 10.32am BST The news that Britains factory sector has posted its slowest growth in 17 months sent the pound down to a two-week low of $1.616 against the US dollar.The data could encourage Bank of England policymakers to leave interest rates low for longer.Given the ongoing strong performance of the service and construction sectors, we still expect a February interest rate rise from the Bank of England. However, this poor manufacturing reading will add weight to the MPC doves argument of keeping rates lower for longer. 10.23am BST The slowdown in Britains factories could be a blow to efforts to rebalance the economy.Rob Wood of Berenberg bank says the UK will remain heavily dependent on domestic demand and service sector growth until the Eurozone picks up again.With the conflict in Ukraine now frozen confidence on the content could stabilise soon. But the continuing fall in sentiment in Germany suggests a risk that it may be a couple of months yet before that happens. 10.10am BST The uncertainty around last months Scottish independence vote may also have hit UK factories, according to David Richardson, head of manufacturing at Lloyds Bank Commercial Banking.Richardson says:The slowdown in manufacturing is worrying, but the market is likely to settle as confidence rebounds on the back of a relatively more stable domestic political backdrop. Management teams must remain focused on building ties with foreign markets, particularly beyond the Eurozone, if they are to keep output levels in positive territory. 9.56am BST The worrying slowdown in Britains factory sector last month is primarily due to the weakness of the euro economy, according to David Noble, CEO of the Chartered Institute of Purchasing & Supply.Noble says:Whilst the sector is still expanding, growth is much softer than that seen in the first half of the year and indicates that growth in manufacturing may be harder to find in the final quarter of the year.The continued weakness in Eurozone countries and the euro-sterling exchange rate appeared to particularly undermine growth in September, and resulted in near stagnation in new manufacturing orders. 9.39am BST Britains factory sector has also suffered a bad September, with growth slowing sharply.The manufacturing PMI, which measures how hundreds of UK firms performed last month, has fallen to 51.6, from 52.2 in August.Whoopsadaisy. UK PMI 51.6Inflows of new work slowed in both domestic and export markets. Overseas demand was reined in mainly by the ongoing lethargy of the eurozone and the appreciation of sterling against the euro. 9.37am BST Oh dear, the UKs factory sector has reported its slowest growth since spring 2013. Details to follow.... 9.27am BST The eurozone factory sector has suffered a slowdown last month, dragged back by Germany (see here) and France (see here).The overall euro area manufacturing PMI, calculated from this mornings data from Markit, slipped to just 50.3, a 14-month low, close to stagnation.Septembers eurozone PMI makes for gloomy reading. The euro areas manufacturing economy has lost the growth momentum seen earlier in the year, lurching closer to stagnation. The near-term outlook also looks worrying. Order books are now deteriorating for the first time since June of last year, suggesting output could start to fall as we move into the final quarter of the year. Not surprisingly, firms are focusing on cost-cutting, resulting in an ongoing lack of job creation and sending a depressing signal of little hope for any reduction in the regions near-record unemployment rate. 9.17am BST The euro has fallen by almost half a cent against the US dollar to a new two-year low around $1.2595.Investors are anticipating that the unexpected (although small) contraction in Germanys factory sector raises the chances of further stimulus measures from the European Central Bank.#Euro falls markedly against #dollar on German manufacturing #PMI release http://t.co/ibUmS46RRg pic.twitter.com/QXJAyAVIiO 9.15am BST Financial experts arent impressed by the German PMI report:Uh-oh. Germany has stalledGerman manufacturing now (well just) in contraction mode at 49.9. First time contraction for 15 months #euro #fx #germany 9.12am BST Here are the key points on Germanys unexpectedly poor manufacturing PMI report: 9.06am BST Bad news for Germany -- growth in its factory sector has ground to a halt after 14 months of steady growth. Russian sanctions, and the weak eurozone economy, appear to be hitting Europes largest economy.New work from foreign markets, meanwhile, rose marginally, albeit at the slowest pace in the current 14-month spell of growth. Survey participants attributed the weaker expansion to the Russian sanctions and subdued growth in main export destinations (e.g. China). Septembers manufacturing PMI results paint a worrying picture of the health of Germanys goods- producing sector. The headline PMI fell to its lowest level in 15 months, heavily weighed down by the sharpest drop in new orders since the end of 2012. Surveyed companies reported that a weakening economic environment, Russian sanctions and subdued growth in key export destinations were reasons behind the disappointing reading. 8.58am BST Frances factory sector continues to contract, though, but at a slower rate.The French manufacturing PMI came in at 48.8 in September, up from 46.9 in August. That shows that activity fell again, but at a slower rate.French manufacturing sector downturn eases in September, #PMI at 48.8 (46.9 in Aug) http://t.co/urizunlYVe pic.twitter.com/rcDUslJE3IAlthough the rate of contraction eased in September, the French manufacturing sector continued to struggle, with output, new orders and employment falling further. There seems to be no end in sight to the persistently weak demand environment, and the PMI data suggest that the manufacturing sector will have weighed on GDP throughout the third quarter. 8.52am BST Good news from Italy, its factory sector has returned to growth.Thats according to Markits PMI index, anyway, which rose to 50.7 in September from 49.8 in August -- so back into expansion territory.Markit/ADACI Italy Manufacturing #PMI rises from 49.8 in Aug to 50.7 http://t.co/I4HtYJbdvd pic.twitter.com/0rOFyQ5PndNowhere is this more evident than in the trend in new orders, the rate of growth of which has slowed to a crawl over the past five months. A further notable gain in new export orders pointed to the weakness coming from within the domestic market.Septembers survey meanwhile showed some downward movement in producer prices as manufacturers sought to support sales through discounting. The decrease in charges was only modest, but nevertheless adds to the broadening picture of deflation in the economy. 8.47am BST Russias factory sector lost momentum last month as export demand fell sharply.Its manufacturing PMI dropped to 50.4 -- close to the 50-point mark that shows stagnation. Septembers HSBC Russia Manufacturing #PMI at 50.4, down from 51.0 in August http://t.co/svfVGNXXPb pic.twitter.com/DoKGvzqoZ9While total new orders showed signs of stronger recovery, export demand plunged in September.... 8.42am BST Factories in the Netherlands grew at a faster rate in September, Markit reports:But as with Spain, manufacturers also reported that average purchasing costs fell last month, for the first time in four months.Dutch manufacturing continues to expand at moderate pace in Sep, #PMI at 52.2 (51.7 in Aug) http://t.co/kRKFQjwjWn pic.twitter.com/zO3tsWFLt3 8.39am BST Meanwhile in the eurozone, Spains factory sector has posted another month of growth, based on interviews with purchasing managers across the country.The Spanish manufacturing PMI for September came in at 52.8, according to Markit. Slightly lower than Augusts 52.8, but still showing growth (50 is the dividing line between expansion and contraction).Spain mfg #PMI at 52.6 in Sep (52.8 in Aug). Input prices fall for first time in 5 months http://t.co/sOm7TmcfE6 pic.twitter.com/ljLFeEiQUo 8.35am BST City Indexs Josh Raymond sums up the problem facing Sainsburys et al:food deflation and smaller basket shopping means one thing....lower profits for grocers #tesco #sainsburys #morrisons 8.31am BST Coupe also defended that poster, urging staff to get customers to spend an extra 50p.Sainsbury's CEO says wouldn't have wanted 50p poster displayed in window but "not surprising that we are in the business of selling things". 8.27am BST Hmmmm, Sainsburys shares have turned south, down 4% after Mike Coupe told reporters that its dividend policy would be part of its strategic review. 8.18am BST Sainsburys CEO Mike Coupe is holding a press call with reporters now.He has insisted that the company is 100% confident that it has been accounting for its commercial income correctly. Sainsbury's CFO says 100% sure that "we account for promotional monies in the correct way".Sainsbury's CFO says no change to dividend policy but strategic review underway and co reviews div policy regularly. 8.13am BST Retail analyst Steve Dresserman reckons that the FCAs decision to launch a full investigation into Tescos is a significant development. FCA investigating is significant as presumably criminal proceedings could take place if wrongdoing is established. 8.06am BST The London stock market is open, and shares in J Sainsbury are up around 0.6% after this mornings financial results (details). The City must reckon that it could have been worse...Rival Morrisons is the biggest faller on the FTSE 100, down 2.8%. 8.00am BST Sainsburys new chief executive, Mike Coupe, must be looking enviously at his predecessor Justin King, who enjoyed a decades-worth of rising sales before resigning to plaudits in the summer.Its rather similar to Tesco, where problems emerged shortly after Sir Terry Leahy stepped down three years ago to be replaced with the - now fired - Phil Clarke.With these results, its increasingly clear Mike Coupe took the hospital pass just like Philip Clarke.Yes, convenience and online may be moving in the right direction but the rot is setting in. 7.55am BST We got an insight into the situation at Sainsburys yesterday, when it emerged that staff were being urged to get shoppers to spend an extra 50p on every visit.A motivational poster was meant to be pinned up in the staff room, but unfortunately (or not), one staff member helpfully stuck the poster up in a shop window for everyone to see.The Fifty pence challenge poster was snapped by passerby Chris Dodd, who loaded his picture onto Twitter. The image was then rapidly retweeted by more than 3,700 people. Lets encourage every customer to spend an additional 50p during each shopping trip between now and the year end, it read. 7.48am BST The 2.8% drop in like-for-like sales at Sainsburys (ex fuel) in the last quarter isnt quite as bad as some analysts had expected.City traders are predicting that Sainsburys shares could rise by 2%-4% when trading begins shortly. 7.43am BST The frenzied competition in Britains supermarket sector has forced J Sainsbury to cut its sales forecasts for the second half of the financial year.New CEO Mike Coupe, who replaced veteran Justin King in the summer, warned shareholders in this mornings trading statement that the last few months have been tough, with many food prices falling (great news for customers, of course)An increase in price investment and short-term competitor promotional activity, combined with favourable commodity markets, has resulted in deflation in many areas of our food business.In the second quarter, our performance has been impacted by the accelerated pace of change in the grocery market, including significant pricing activity and food price deflation in many areas. These conditions are likely to persist for the foreseeable future and we now expect our like-for-like sales in the second half of the year to be similar to the first half. 7.34am BST Big news this morning -- The Financial Conduct Authority has begun a full investigation into Tesco.The move comes nine days after the supermarket giant stunned the world of business by admitting that it overstated its profit forecasts earlier this year, by a staggering £250m.The Financial Conduct Authority (FCA) has notified Tesco that it has commenced a full investigation following the overstatement of expected profit for the half year which was described in our announcement of 22 September 2014 and which is currently the subject of an independent review by Deloitte.Tesco will continue to co-operate fully with the FCA and other relevant authorities considering this matter.Another gloomy day for the big retailers - FCA announces full investigation into Tesco accounts, Sainsbury's like for like sales fall 2.8pc 7.28am BST Good morning, and welcome to our rolling coverage of the financial markets, the world economy, business and finance.Coming up today..... a splurge of economic data from across Europe and beyond, with the monthly manufacturing PMI index. 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