Equities slid with the British pound after a Bank of England warning about challenging risks renewed concerns about the UK's plan to exit the European Union, and its impact on the global economy.

In its semi-annual Financial Stability Report, the Bank of England warned that "the current outlook for UK financial stability is challenging" following the Brexit vote.

"There is the prospect of a material slowing of the economy," BOE Governor Mark Carney said at a press briefing in London following the publication of the report, according to Bloomberg. "The number of vulnerable households could increase due to a tougher economic outlook."

The British pound fell to fresh 31-year low against the US dollar, touching US$1.3000 earlier in the day.


"There's a lot of nervousness in the sterling market," Thu Lan Nguyen, a currency strategist at Commerzbank in Frankfurt, told Bloomberg.

Europe's Stoxx 600 Index ended the session with a retreat of 1.7 per cent from the previous close. France's CAC 40 index also fell 1.7 per cent, while Germany's DAX index dropped 1.8 per cent. Even so, the UK's FTSE 100 index gained 0.4 per cent.

Meanwhile the latest PMI data from Markit Economics pointed to a "near-stalling" of the UK economy last month.

"The PMI surveys indicate that the pace of UK economic growth slowed to just 0.2 percent in the second quarter, losing further momentum in June as Brexit anxiety intensified," Markit Economics said in the report.

Globally, growth eased in the second quarter, expanding at the slowest rate since the fourth quarter of 2012, according to the JPMorgan Global Manufacturing & Services PMI, JPMorgan and Markit said in a joint report.

"The global economy remained in a low growth gear in June, rounding off its weakest quarter since the end of 2012," David Hensley, director of global economic coordination at JPMorgan, said in the report. "A slight improvement in inflows of new work raises some hopes that growth may recover, but with business confidence weak and job creation lacklustre any improvement in headline growth is likely to be modest at best."

Wall Street moved lower. In 3.12pm trading in New York, the Dow Jones Industrial Average shed 0.7 per cent, while the Nasdaq Composite Index dropped 1.1 per cent. In 2.57pm trading, the Standard & Poor's 500 Index slid 1 per cent.

Slides in shares of JPMorgan Chase and those of Caterpillar, recently down 3.3 per cent each, led the drop in the Dow. Shares of Johnson & Johnson and those of Verizon Communications bucked the trend, up 1.3 per cent and 1 per cent stronger respectively in afternoon trading.

"There are risk-off trades across the board," David Thompson, executive vice-president at Washington-based commodities broker Powerhouse, told Reuters. "Stocks, commodities, sterling are all off while US bonds and T-bills are soaring."