Global stock markets mostly faltered yesterday as the International Monetary Fund cut its global growth forecasts after Britain’s EU exit, which also appeared to be casting a shadow over Germany’s outlook.
“European markets were lower yesterday amid a downgrade to economic growth from the IMF and lingering concerns over political turmoil in neighbouring Turkey,” analyst Jasper Lawler, of CMC markets, said in a note to investors.
“The market’s focus has shifted from hopes of central bank easing to company earnings and geopolitics,” he added.
Uncertainty created by Britain’s vote to leave the European Union will slow the global economy into next year, the IMF predicted.
The world economy is set to grow by 3.1% this year and by 3.4% in 2017, the IMF said, revising downward its previous April forecasts.
The IMF also downgraded its 2016 growth forecast for the British economy by 0.2 percentage points to 1.7%. 
Nevertheless London’s benchmark FTSE 100 index appeared to shrug off the gloomy prediction, closing almost flat.
In the eurozone however, both Frankfurt and Paris were firmly in the red.
The euro and pound were both lower against the dollar.
“Interestingly the FTSE took this news in its stride, leaving the pound to absorb most of the blow,” said Connor Campbell, of Spreadex in a note.
Brexit fears also loom large over Europe’s biggest economy. A leading survey showed yesterday that investor confidence in Germany fell to its lowest level in nearly four years in July on concerns about the Brexit fallout.
Britain’s annual inflation rate meanwhile rose last month from May, separate data showed, and faces further gains as a weak pound caused by the Brexit vote raises import prices.
The 12-month Consumer Price Index rose by 0.5% in June, the Office for National Statistics said in a statement.
“Sterling’s weakness means higher import prices, and this is expected to feed through to significantly higher inflation figures in the coming months,” said Ben Brettell, senior economist at stockbroker Hargreaves Lansdown.
The pound slumped to 31-year lows against the dollar after Britain voted on June 23 to exit the European Union. The currency has since recovered slightly. 
Italian bank shares took a hit following a ruling by the EU’s top court upholding rules that require investors to accept losses before state aid is used to shore up lenders.
Shares in Banca Monte Paschi di Siena closed 3.3% down.
With a key referendum on political reforms months away, Italy’s government wants to avoid inflicting losses on the many small investors who bought up unsecured bank debt.
Wall Street dropped as traders caught their breath after a week-long stretch of records for the Dow, with earnings disappointments in Netflix and Philip Morris spurring selling among a raft of earnings reports.