German steel production Economists say business confidence in Europe has been hit by worries over Greece<\/p>\n
Activity at European businesses hit a near three-year low in May, according to a survey by Markit.<\/p>\n
Its index, based on a survey of purchasing managers in the manufacturing and service sector, fell to 45.9 in May, a 35-month low.<\/p>\n
In response, the euro fell to $1.2515 against the dollar, a 22-month low.<\/p>\n
A summit of European leaders on Wednesday evening failed to boost confidence, as leaders disagreed over how to tackle the crisis.<\/p>\n
French President Francois Hollande pushed for pan-European bonds, that would allow struggling nations to raise money at much lower interest rates.<\/p>\n
But Germany says it will oppose such a scheme until there is more budget discipline across Europe.<\/p>\n
The political crisis in Greece was also under discussion.
\nContinue reading the main story<\/p>\n
EU leaders said they wanted Greece to remain in the eurozone, but European Council President Herman Van Rompuy said it should “respect its commitments”.<\/p>\n
Thursday’s economic reports show that concerns over Greece are having a broader economic impact, according to economists.<\/p>\n
Markit’s chief economist, Chris Williamson, said his firm’s research indicated that the European downturn “gathered further momentum in May”.<\/p>\n
“The survey is broadly consistent with gross domestic product falling by at least 0.5% across the region in the second quarter, as an increasingly steep downturn in the periphery infects both France and Germany,” he said in the report.<\/p>\n
Activity at French and German factories fell to the lowest level in almost three years, according to the Markit survey.
\n‘Not good’<\/p>\n
“The flash PMI figures for May look horrible and provide a clear warning that eurozone GDP will almost certainly show a contraction in the second quarter after stagnating in the first quarter,” said Martin Van Vliet, from the bank ING.<\/p>\n
“It’s not good,” said Peter Dixon from Commerzbank.<\/p>\n
“The German ones were particularly disappointing, as we had been expecting some more buoyancy.<\/p>\n
“It clearly indicates that the evaporating sentiment that we have seen in recent weeks, as the Greece crisis has intensified, is having a big impact on the economy.”<\/p>\n
A separate report from Germany’s Ifo showed that business confidence fell sharply in Germany in May.<\/p>\n
The Ifo business climate index, which is based on a survey of 7,000 executives, fell to 106.9 in May, down from 109.9 in April.<\/p>\n
Investors have been seeking the safety of German and UK government bonds. Prices of these bonds rose, driving interest rates on 10-year UK and German government debt to record lows.<\/p>\n
source: www.bbc.co.uk<\/p>\n","protected":false},"excerpt":{"rendered":"
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