* FTSE 100 down 0.6%, FTSE 250 down 0.7%
* Weak U.S. services data weighs
* U.S. tariffs on European Union goods dampen sentiment
* Blue-chip index tracking worst week more than 1-1/2 years
* Ted Baker sinks after profit warning (Adds news items, analyst comment, updates to close)
By Yadarisa Shabong and Shashwat Awasthi
Oct 3 (Reuters) - Britain’s FTSE 100 index touched an eight month low on Thursday after sluggish U.S. services data cemented fears of a global slowdown triggered by a string of weak manufacturing data, while the UK appeared to have tipped into a recession.
UK stocks lagged their European peers and Wall Street, with the main index, which suffered its worst one-day drop since before the 2016 Brexit referendum on Wednesday, ending 0.6% lower. Energy stocks Shell and BP were the biggest drag as oil prices fell on the same worries about the global economy.
The mid-cap FTSE 250 slipped 0.7% to its lowest in more than a month after data showed the UK services sector unexpectedly shrank last month as the country’s exit from the European Union dragged on.
On the blue-chip index, stocks trading ex-dividend added downward pressure, with packaging firm DS Smith, tobacco firm BAT, ad firm WPP, housebuilder Taylor Wimpey and retailer Kingfisher dropping between 2.4% and 5.7%.
A slew of shockingly weak U.S. economic data, lingering fears over the Sino-U.S. trade dispute and heightened no-deal Brexit jitters have spooked traders this week, and the World Trade Organization’s approval of U.S. tariffs on European goods has further fanned fears.
“With markets already looking vulnerable over concerns about a manufacturing recession starting to bleed into a slowdown in the services sector, the WTO ruling could not have come at a worse time,” CMC Markets analyst Michael Hewson said.
Those fears were exacerbated after data showed growth in the world’s largest economy’s services sector slowed to its most anaemic pace in three years last month.
However, increasing bets that the U.S. Federal Reserve would cut interest rates for the third time this year later this month helped the FTSE 100 recoup some losses later in the session.
“We do not see this early fourth quarter weakness as heralding the end of the equity bull market, however the central bank reaction to declining U.S. data will be key for equities going forward,” said Edward Park, Deputy Chief Investment Officer at investment manager Brooks Macdonald.
The globally-exposed FTSE 100 is headed for its steepest weekly fall in more than one-and-a-half years.
Notable movers included Ted Baker, which posted its biggest ever one-day decline, slumping 40% to a nine-year low after reporting a first-half pre-tax loss and warning that unseasonably warm weather, heavy discounting by rivals and weak consumer demand would hit full-year profit.
Online trading platform CMC Markets climbed 7.7% after it forecast a jump in annual earnings.
Mid-cap gold miner Centamin lost nearly 10% after issuing a production forecast for the third quarter and saying its chief executive officer would retire. (Reporting by Yadarisa Shabong, Muvija M and Shashwat Awasthi in Bengaluru and Josephine Mason in London; Editing by Shounak Dasgupta and Kirsten Donovan)