The euro zone's services sector was still floundering in May but Britain got a modest economic bounce after the end of war in Iraq, major surveys showed today.
The data reinforced expectations that the ECB will cut its key interest rate when it meets tomorrow, probably by half a percentage point to 2 per cent, while the Bank of England will keep rates on hold at 3.75 per cent.
The Reuters Eurozone survey of more than 2,000 companies in the services sector - embracing firms ranging from airlines to cafes and cleaning services - showed activity shrank in May, albeit at a slightly slower pace.
New business shrank, optimism faded and more jobs were cut "as companies noted how the improved geopolitical situation had failed to translate into growth of new business," said NTC Research, which compiles the survey for Reuters.
But in Britain, the companion survey showed service sector activity growing for the second month running.
"Modest activity growth in May generally reflected rises in general business sentiment due to the end of hostilities in Iraq," the British survey said.
Optimism for the British business outlook rose to its highest level since last September and British interest rate futures stepped back minutes after the numbers were released as investors scaled back their rate cut expectations.