The euro zone may escape recession thanks to a surprise upturn in the service sector this month but the overall economy is still struggling to gain any traction outside Germany and to a lesser extent France, surveys showed today.

European services and manufacturing output strengthened during the month, led by a "robust" performance by Germany,. A euro-area composite index based on a survey of purchasing managers in both industries jumped to 50.4, a five-month high, from 48.3 in December, London-based Markit Economics said.

Economists forecast a reading of 48.5, according to the median of 17 estimates in a Bloomberg News survey. A reading above 50 indicates expansion.

European finance ministers continue talks today on crafting a long-term fix to the region's debt crisis after calling yesterday on bondholders to provide greater debt relief to Greece. While the turmoil has undermined the recovery, some measures of investor and consumer confidence have improved and European Central Bank president Mario Draghi has said 2012 will be a "much better" year.

"The euro-zone economy appears to have stabilised in January," Chris Williamson, chief economist at Markit, said in a statement today. "However, we remain cautious about the improvement. Inflows of new business continued to fall, meaning the marginal increase in output seen in January was the result of firms eating into their backlogs."

A gauge of euro-region manufacturing rose to 48.7 from 46.9, Markit said. A measure of services climbed to a five-month high of 50.5 from 48.8. Indexes of incoming new business and backlogs fell in both industries.

German manufacturing expanded in January for the first time in four months, according to a separate release from Markit. The nation's factory gauge rose to 50.9 from 48.4 in December, while the services index jumped to a seven-month high of 54.5 from 52.4 in December. The composite index of both industries also reached a seven-month high.

In France, manufacturing contracted at a faster pace this month, with an index falling to 48.5 from 48.9. The services measure rose to 51.7, a five-month high, from 50.3.

Bloomberg