Page last updated at 11:29 GMT, Friday, 3 October 2008 12:29 UK

Eurozone services signal slowdown

The euro sign is seen in front of the European Central Bank in Frankfurt
There are fears of a recession in the eurozone

Service activity in the eurozone failed to grow in September, a further sign that the 15-member region is seeing a slowdown, figures suggest.

The Eurozone Services Purchasing Managers Index showed a reading of 48.4 last month, slightly down from a reading of 48.5 in August.

The index covers everything from airlines to finance firms. Anything less than 50 denotes contraction.

A day earlier the European Central Bank opted to leave interest rates on hold.

While the bank resisted pressure to lower rates from 4.25% on Thursday, the ECB's head, Jean Claude Trichet, suggested the bank would consider a rate cut.

Recession fears

There are growing worries among policymakers that parts of Europe will or have already entered into a recession, with this survey lending support to those fears.

The slowdown was broadbased, Chris Williamson, lead economist at data firm Markit, which compiled the service sector survey, said. "Problems were by no means confined to the financial sector, with a broad-based downturn evident in all main sectors."

The country that saw the most dramatic slowdown was Spain, with record drops in prices as companies tried to lure customers.

Another sign that times have become tougher was evident as firms continued to cut jobs.

Separately on Friday, France's Finance Minister Christine Lagarde said the country faced a real risk of slipping into a recession, with figures expected to show two consecutive quarters of contraction.

European finance ministers are meeting on Saturday in Paris to address the financial crisis. Leaders from Britain, Germany and Italy, as well as the president of the European Commission and European Central Bank chief, are to attend.




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