World economy slows heading into year-end - PMIs

A labourer works at a factory of Sany Heavy Industry Co Ltd on the outskirt of Shanghai, October 26, 2012.

REUTERS - The world economy slowed in October, dragged back mainly by a shrinking manufacturing sector, a business survey showed on Tuesday.

JPMorgan's Global All-Industry Output Index fell in October to 51.3 from September's 52.4, although it stayed above the 50 mark dividing growth from contraction.

"The start of the final quarter has seen global economic growth continue to track at a below long-run trend pace," said David Hensley, director of global economics coordination at JPMorgan.

"A contracting manufacturing sector remains the main drag, while the larger service sector remains on a subdued expansion path."

The global services index also fell to 52.1 from September's 53.8, although it still signalled expansion for a 39th straight month.

"Although rates of growth in both output and new orders lost momentum, companies were sufficiently encouraged to raise employment for the second time in the past three months," said Hensley.

JPMorgan said the euro zone remained the biggest setback for the world's services economy, after data earlier on Tuesday confirmed a steep downturn for the currency zone's biggest economies.

(Editing by Ruth Pitchford)