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Fears grow over manufacturing dip

The UK's manufacturing sector contracted for the second month in a row in June as the eurozone debt crisis continued to weigh on exports.

The latest Markit/CIPS survey, where a reading above 50 represents growth, was at 48.6, although this was up from a three-year low of 45.9 in May and slightly better than City expectations.

Levels of output rose following sharp declines the previous month, but new business wins and overseas demand both contracted for the third month amid the eurozone crisis and slowing growth in the US and Asia.

The Queen's Diamond Jubilee distorted the picture for June, but the latest reading suggests the sector's output is set to decline at least 0.5% in the second quarter of 2012, Markit said, fuelling fears that the UK's double-dip recession will continue.