Business activity in European countries fell in March, but the pace slowed as efforts to revive economies appeared to take hold and pessimism ebbed after a plan by world leaders to kick start a global recovery.
In the 16-country euro area, companies also continued to slash jobs in an effort to cut costs, driving the Markit Eurozone Composite PMI employment index to a new low of 40.3, down from February's 40.8.
The euro zone's dominant service sector contracted sharply again in March, but not as rapidly as in February. "With the rate of decline easing in the final month of Q1, and confidence improving to the highest since Lehman's collapse, there are signs that we may be over the worst," said Chris Williamson at data provider Markit.
But Italian service sector activity stayed close to record lows in March, with employment in the euro zone's third-largest economy falling the fastest in over 11 years.
Yet the expectations index jumped to 61.1 from 54.9, showing an increasing proportion of managers thought business would be better in 12 months' time.
"The belief that the economic downturn is beginning to stabilise, coupled with signs of improving credit markets, resulted in a marked rise in business sentiment during March. Optimism was at its highest for six months," Markit said.
Financial markets have also got a whiff of recovery with European stock markets rallying sharply along with world shares over the past few weeks.
Today, European shares dipped then turned positive after yesterday's 4.9 per cent rise that followed the G20 leaders clinching the $1.1 trillion deal.
Asian stocks rose for a fourth straight day as perceptions of a coordinated global policy response grew after the G20 summit.
The leaders of the world's richest and biggest economies, which account for more than 80 percent of world trade, also agreed to tighten rules on tax havens, hedge funds and credit rating agencies.
The measures agreed to would raise world output by 4 per cent by the end of 2010, they said, although they were hazy on the amount of stimulus spending to date, with estimates ranging between $2 trillion and $5 trillion.
World Trade Organisation head Pascal Lamy welcomed G20 consensus to avoid protectionism and an agreement to support global trade flow.
"It is a very positive response," Lamy said. "Implementation now is something we will be watching."
Reuters
