Euro zone in reverse, China speeds up

Thu Mar 21, 2013 9:37am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Jonathan Cable

LONDON (Reuters) - The euro zone's economic downturn deepened this month, even before Cyprus' bailout troubles, but China's factories took a completely different path and moved up a gear, business surveys showed on Thursday.

Figures due later from the United States are expected to show a pick up by factories in the world's largest economy.

The euro zone survey results will add to the headache of policymakers battling to revive the currency bloc's fortunes and now to deal with the potential default of one of its members.

Most responses were received before Cyprus's parliament rejected a bailout deal that including an unprecedented levy on all bank deposits - leaving the country perilously close to financial collapse.

Data also showed leading economy Germany with signs of fatigue. French businesses turned in their worst performance in four years, probably plunging the euro zone's second-biggest economy into a recession.

"The sharp decline in the flash composite PMI in March pours cold water on hopes of an imminent end to the euro zone recession," said Martin van Vliet, economist at ING.

"If the situation surrounding Cyprus spirals out of control the onset of recovery might well be delayed."

Markit's Flash Euro zone Composite Purchasing Managers' Index (PMI), which makes up around 85 percent of the final reading and is seen as a reliable economic growth indicator for the bloc, fell to 46.5 in March from February's 47.9.   Continued...

Containers are seen at the container terminal "Burchardkai" of the Hamburger Hafen und Logistik AG (HHLA) in the harbour of Hamburg October 17, 2012. REUTERS/Fabian Bimmer