Post date: Sep 22, 2011 3:33:59 PM
A raft of disappointing data from the euro zone paints a grim outlook for europe's economy with the euro zone private sector contracting for the first time in 2 years as the sovereign debt crisis escalates.
EUROPE-ECONOMY - European shares took a beating a day after the U.S. Federal Reserve met warning of significant risks to an already struggling economy. And news China's manufacturing sector has slowed for the first time in 2 years.
Europe's top index of european shares were down more than 4 percent. While losses on France's CAC and Germany's DAX were off nearer 5 percent.While losses on France's CAC and Germany's DAX were off nearer 5 percent.
There was more gloom from europe after a raft of economic data pointed to negative growth.
The euro zone service sector shrunk for the first time in 2 years.
Manufacturing slowed for the second month and the Purchasing Managers' Index or PMI which measures business activity from banks to restaurants sank to 49.1 this month - its lowest level in two years.
Gustavo Bagattini is an economist at RBC Capital Markets.
Gustavo Bagattini, european economist, RBC Capital Markets, saying
"Today's figures are definitely disappointing by our estimates they're consistent with both German and French GDP growth being flat in Q3 and for the euro area as a whole actually a fall of about 0.2 percent in Q3 even though we think that's understating the true pace of growth."
Germany's usually robust manufacturing sector barely grew at all and its service sector also slowed.
Rob Dobson of Markit, the data firm behind the numbers, says the outlook in the longer term isn't looking good.
Rob Dobson, senior economist, Markit, saying
"The Services Future Activity Index, that was at its weakest level since April 2009, indeed that fell below the 50 no change mark which suggests that a greater proportion of companies are expecting activity in services to be lower in 1 year's time than they're expecting it to be higher."
Economists say the surveys point to economic stagnation and the debt crisis is now hitting confidence as well as growth.
Hayley Platt, Reuters.