Euro-area services and manufacturing output contracted more thaneconomists forecast in October and German business confidencedropped to the lowest in more than 2 1/2 years as Europe'srecession deepened.

A composite index based on a survey of euro-area purchasingmanagers in services and manufacturing fell to 45.8, the lowest inmore than three years, from 46.1 in September, London-based MarkitEconomics said today. Economists had forecast a reading of 46.5,according to a Bloomberg News survey. A separate factory index inChina rose. In Germany, the Ifo institute's business climate indexunexpectedly dropped to 100.0 from 101.4 in September.

The European Central Bank and the International Monetary Fundhave both lowered their forecasts for the euro-area economy asgovernments cut spending to plug budget gaps, eroding consumer andexport demand. Even so, the region's debt burden rose to a recordin the second quarter, reaching 90 percent of gross domesticproduct, another report showed today.

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