LONDON – The downturn in the euro-zone economy, particularly within the manufacturing sector, gathered pace in November amid mounting recession fears and the deepening financial crisis, a closely watched survey showed Friday.

The monthly preliminary estimate of the purchasing managers index for the manufacturing sector slumped to a record low of 36.2 in November from 41.1 the previous month. The survey is 11 years old.

Meanwhile, the equivalent estimate for the services sector also dropped to a record low, at 43.3 in November from October’s 45.8. The services survey began in 1998.

A reading below 50 indicates contraction and the bigger the gap the greater the contraction.

Analysts said the data underlines how fast the economy in the countries sharing the euro is deteriorating, especially as forward-looking indicators within the surveys, such as incoming business and backlogs of work are contracting at record rates.

The euro-zone economy is already officially in recession but these figures suggest that economic output in the coming year could sink by more than 1 percent, said Ben May, European economist at Capital Economics.

Most economists think the need for rapid action from the European Central Bank and governments is imperative.

“Against this backdrop it is our view that only decisive and quick monetary and fiscal stimuli may help to avoid a prolonged recession in the common-currency area,” said Jorg Radeke, economist at the Centre for Economic and Business Research in London.

Governments across the euro-zone are set to announce tax cuts in the coming weeks, while the European Central Bank is expected to cut its benchmark rate by at least another half point from its current 3.25 percent at its next meeting in early December.

LONDON – European stock markets fell Tuesday following Asian losses amid further gloom about the state of the world economy and the banking system’s prospects in particular.

The FTSE 100 index of leading British shares was down 63.37 points, or 1.5 percent, at 4,069.79, while Germany’s DAX was 64.85, or 1.4 percent, lower at 4,492.42. The CAC-40 in France was down 47.79, or 1.5 percent, at 3,134.24.

Banks across Europe were particularly badly hit by recession fears after Citigroup announced it would cut thousans of jobs, with Barclays PLC down 6 percent, HBOS PLC another 12 percent, Deutsche Bank AG 5 percent and Commerzbank AG 6 percent.

“There is huge uncertainty hanging over the markets’ head, and banks are really out of favor,” said Howard Wheeldon, senior strategist at BGC Partners.

The morning losses in Europe follow similar drops in Asia. Tokyo’s Nikkei 225 stock average fell 194.17 points, or 2.3 percent to 8,328.41, a day after confirmation Japan, the world’s second largest economy, had slipped into a recession. Hong Kong’s Hang Seng Index shed 4.5 percent to 13,131.23.

The lurch lower in Europe and Asia followed Wall Street, where traders sold heavily on evidence of more economic weakness and Citigroup Inc’s announcement Monday that it is to cull 53,000 jobs around the world as it seeks to deal with the impact of the financial crisis.

The Dow fell Monday by 223.73 points, or 2.6 percent, to 8,273.58. The Standard & Poor’s 500 index fell 22.54, or 2.6 percent, to 850.75. Wall Street futures pointed to a lower open on Tuesday. Dow futures were down 1.1 percent to 8171.

Some hopeful signs emerged with the news that inflation in Britain fell in October for the first time in 14 months largely because of cheaper oil prices.

Official figures showed that the annual rate of the consumer price index measure of inflation dropped to 4.5 percent in the year to October from 5.2 percent in the year to September. Analysts had expected a more modest decline to 4.7 percent.

As a result, the markets are expecting the Bank of England to continue to cut interest rates aggressively over the coming months, with some predicting it to lop off another percentage point of its benchmark rate when it meets again in early December.

“So long as credit conditions improve significantly over the coming quarters, in line with government support measures for the banking system, the very low level of interest rates and likely fiscal stimulus should act as a powerful stimulus for the economy,” said David Page, European economist at Investec Securities.

Further good inflation news is anticipated out of the U.S. later. Producer price data are expected to show that falling energy and commodity costs are substantially easing industrial cost pressures. Analysts are forecasting that the producer price index for October will fall a monthly 1.7 percent, way more than the 0.4 percent decline recorded in September.

Earlier in Asia, the Shanghai Composite index slid 6.3 percent after advancing four straight days. Australia’s main index declined 3.6 percent and South Korea’s Kospi fell 3.9 percent.

In Asia too, banks were badly hit, with Japanese mega bank Mitsubishi UFJ Financial Group Inc. down 7 percent, while China Construction Bank 6 percent as investors soured on Bank of America’s deal to increase its stake in Chinese company.

Wilting prices for oil, metals and other commodities sent resource companies lower. China’s Sinopec Corp. dropped 5.7 percent and Australia’s BHP Billiton Ltd., the world’s largest miner, retreated 3.6 percent.

Fears of a prolonged recession around the world sent oil prices drifting below $55 a barrel Tuesday. Light, sweet crude for December delivery slipped 55 cents to $54.40 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. The contract Monday fell $2.09 to settle at $54.95, the lowest since January 2007. Prices have fallen about 62 percent since reaching a record $147.27 in mid-July.

In currencies, the dollar was steady at 96.32 yen, while the euro was 0.2 percent weaker at $1.2616.

BRUSSELS, Belgium – The 15 countries that use the euro are officially in a recession, the European Union said Friday, as their economies shrank for a second straight quarter because of the world financial crisis and sinking demand.

The euro zone shrank 0.2 percent in both the third and second quarters from the quarter before, further stoking expectations the European Central Bank will cut interest rates to limit the economic damage. Two successive quarters of shrinkage is one common definition of a recession.

The spending slowdown and tight credit conditions have industry hurting across the continent: carmakers, a major source of exports in countries like Germany, said sales are slumping. Car sales in October slumped 14.5 percent in October from the previous year, the sixth consecutive monthly fall, the ACEA industry association said.

The worry is that the sharp reining in of personal spending will push the jobless rate much higher in the months to come. So far, euro-zone economies — with 16 percent of world output and 319 million people — have not seen unemployment surge, though the EU executive Commission estimates that it will rise steadily over coming months.

“The euro-zone is not immune to what’s going on in the world economy generally, and exporting nations, like Germany, are totally plugged into the fortunes of the world economy,” said Neil Mackinnon, chief economist at ECU Group. “We’re in for a pretty severe economic slump.”

Markets are pricing in the likelihood of another half-percent interest rate from the European Central Bankat its next rate-setting meeting in early December, but many analysts think that with inflation easing it should move more boldly and cut its benchmark rate a full percentage point, from the current 3.25 percent to 2.25 percent.

Cuts spur growth by reducing borrowing costs but can also make inflation worse; with oil prices easing, however, many think the downturn is dire enough to make the bank keep on cutting.

It is the first such slump faced by the ECB since the euro was introduced in 1999 and it took over interest rates for the countries using the currency.

“The clear deterioration in the economy and ongoing signs that the euro area corporate sector faces difficulties to access finance suggests that the ECB should be taking some insurance against the risks of what could turn out to be a much deeper downturn,” said Jacques Cailloux, European economist at the Royal Bank of Scotland.

The bank last cut rates a half-point on Nov. 6.

The EU confirmed that two of the euro-zone’s largest economies — Germany and Italy — joined Ireland in recession after posting 0.5 percent declines in the third quarter, and that France narrowly escaped, having expanded 0.1 percent in the third quarter after shrinking in the second quarter.

Spain contracted a quarterly 0.2 percent in the third quarter and is predicted by analysts to enter an official recession when the next quarter figures are published in early 2009 because of its slumping housing market.

The last major recession to hit European economies was in 1993 when each country controlled its own monetary policy and could react individually to economy problems. Euro-zone nations face more trouble in acting alone now and must consult the EU executive before launching major programs to kickstart the economy with deficit spending and state subsidies.

It’s not just countries using the euro that are in trouble. Estonia and Latvia — until recently part of the Baltic boom — are in recession. Britain’s economy shrank 0.5 percent in the last quarter.

Overall, the 27-nation EU has so far escaped recession — barely — thanks to growth in a number of countries in eastern Europe, such as the Czech Republic and Lithuania. The EU shrank 0.2 percent in the third quarter after zero growth in the second quarter-on-quarter.

The one bright spot on the horizon is that plummeting oil prices brought the annual inflation rate in the euro-zone down to 3.2 percent in October.

The rate of price increases has been gradually falling from a record high of 4 percent in June and July but is still well above the European Central Bank’s guideline of just under 2 percent that it looks to when it considers hiking or lowering interest rates.

On a year-on-year basis, the euro-zone grew 0.7 percent, down on the 1.4 percent recorded in the second. For the full 27-member EU, growth more than halved on a year-on-year basis to 0.8 percent in the third quarter from 1.7 percent in the second.

By Aoife White, Pan Pylas

LONDON – World stock markets slumped Thursday despite interest rate cuts across in Europe, including a much bigger than anticipated reduction from the Bank of England, as investors continued to fret about the outlook for the global economy.

The FTSE 100 index of leading British shares closed down 258.32 points, or 5.7 percent, at 4,272.41, while Germany’s DAX was 353.30, or 6.8 percent, lower at 4,813.57. France’s CAC-40 was down 230.86 points, or 6.4 percent, at 3,387.25.

The Dow Jones index of leading U.S. shares was down 301.39 points, or 3.3 percent, at 8,837.88. Thursday’s losses on the Dow come a day after a nearly 500 point decline Wednesday.

Any hopes that lower borrowing costs around Europe would fuel a rally in stocks soon dissipated and investors continued to book profits following recent sharp gains amid mounting fears about the state of the world economy. Rate cuts often boost stocks in the short term and can support growth, but on Thursday investors were not impressed, especially with the ECB decision.

While the Bank of England slashed its benchmark rate by 1.5 percentage points to 3.0 percent, a level not seen since 1955 and its biggest single cut since March 1981, the European Central Bank and the Swiss National Bank — in an unscheduled decision — opted for more modest half-point reductions. Central banks also cut rates in Denmark and the Czech Republic.

The Bank of England’s bigger than anticipated rate cut stoked expectations that the European Central Bank would be more aggressive than expected. Its decision to cut by only a half-percent disappointed investors looking for more boldness.

“The prospects for the euro-zone avoiding recession now look virtually non-existent, and the ECB will be challenged to change its relatively conservative approach quickly to boost prospects across the continent, before a bad situation gets decidedly worse,” said Ben Read, managing economist at the Center for Economic and Business Research.

The failure of the FTSE to rally strongly in the wake of the Bank of England’s aggressive interest rate cut indicated that the bank may have further reinforced fears about the length and depth of the recession in Britain.

“What does the Bank know that the rest of us don’t?” said Andrew Milligan, head of global strategy at Standard Life Investments.

“The Bank of England’s inflation report due out next week should provide the answer, giving investors full and detailed information about its views on the depth and extent of the British recession and how far inflation might fall in 2009,” he added.

Europe’s indexes had already been lower in the wake of hefty losses Wednesday on Wall Street and in Asia overnight as investors fretted about the global economy. Japan’s Nikkei index was down 6.5 percent at 8,899.14, and Hong Kong’s Hang Seng Index 7.1 percent lower at 13,790.04.

Stocks around the world have enjoyed a strong rally over the last week or so, partly on relief that the U.S. presidential election was coming to an end.

However, investors know that President-elect Barack Obama will have his work cut out to improve the U.S.’s immediate economic prospects and that Inauguration Day is still more than two months away.

Further proof of the scale of the downturn in the U.S. emerged Thursday with jobless claims data fanning investors’ worries that the economy is in recession.

New claims for unemployment benefits did dip by 4,000 to a seasonally adjusted level of 481,000, according to the Labor Department. But jobless claims above 400,000 are considered recessionary levels, and have run above that figure for 16 weeks.

The run of bad claims data has ratcheted up fears that Friday’s closely-watched U.S. jobs report for October will end up being much worse than anticipated.

Earlier, South Korea’s benchmark Kospi index broke a five-session winning streak to dive 7.6 percent. Markets in Singapore, Australia and mainland China also dropped sharply.

Concerns about the global economic outlook hit oil prices too. They were down $4.35 a barrel to $60.95 a barrel. Oil prices have fallen by around 60 percent since peaking at $147.27 a barrel in mid-July.

Disappointment about the European Central Bank’s interest rate cut hit the euro, which was down 0.8 percent at $1.2855. Elsewhere, the dollar was up 0.1 percent at 98.30 yen.

AP Business Writers Tim Paradis in New York and Jeremiah Marquez in Hong Kong contributed to this report.

LONDON – World stock markets on Tuesday recovered some of their hefty losses from the previous day, helped by a steady opening on Wall Street after the U.S. Federal Reserve announced that it would buy massive amounts of short-term debts in an attempt to ease tight credit markets.

The Fed said it is invoking a Depression-era power to buy commercial paper, a short-term financing mechanism that many companies rely on to finance their day-to-day operations, such as purchasing supplies or making payrolls. The $99.4 billion daily market for this crucial financing, which relies on investors rather than banks, has virtually dried up as most investors have become too worried to buy paper for longer than a couple days.

“The move is confirmation that the focus for policymakers has turned to limiting the impact of financial sector strains to the non-financial sector,” said Divyang Shah, an analyst at the Commonwealth Bank of Australia.

Hopes that the latest Fed move will help unclog credit markets initially pushed the Dow Jones index above the 10,000 mark. Bank of America Corp.’s announcement that it is looking to raise $10 billion and slash its dividend pared those early gains. But by late morning in New York, the Dow was down about 60 points at about 9,890.

In Britain, the FTSE 100 index was up 137.01 points, or 3.0 percent at 4,726.20 by afternoon in Europe. The CAC-40 index in Paris was 112.12 points, or 3.0 percent, higher at 3,824.10, while Germany’s DAX was up 72.30 points, or 1.3 percent, at 5,459.31.

There are hopes that the Fed’s move on commercial paper may be replicated in Europe too, even though the European Central Bank hasn’t got explicit authority to do so and that commercial paper does not feature as prominently in the 15-nation single currency zone.

Jacques Cailloux, economist at the Royal Bank of Scotland, said the ECB could already have the ability to do such purchases through open market operations the bank already has as a tool to provide banks with liquidity.

“It looks to us that the ECB has already got the framework that could allow it to buy commercial paper in the euro area directly from their issuers,” said Cailloux.

Europe’s markets were in positive territory earlier on hopes that the world’s leading central banks will cut interest rates soon, possibly in a coordinated manner to deal with the world financial crisis.

Those hopes, which were fueled by the Reserve Bank of Australia’s overnight move to cut borrowing costs by a massive 1 percentage point to 6 percent, helped diminish the impact of another bad day for bank stocks, particularly in Britain. Royal Bank of Scotland Group PLC shed around 40 percent of its value at one stage amid ongoing liquidity and solvency concerns and reports that the government might seek a stake in British banks to boost their balance sheets.

The Australian central bank’s cut was its biggest since 1992 and the scale of it was unexpected. Analysts were predicting a half-point cut, especially after the Australian dollar slumped by nearly 10 percent Monday.

The move sent Sydney’s S&P/ASX-200 index, which had opened 3.7 percent lower, up 1.7 percent to 4,618.7 and helped the Australian dollar push back up above 72.56 U.S. cents. Other markets, including the main indexes in South Korea, Singapore and Taiwan, rebounded after the bold move and market observers said the same could happen if other central banks follow suit.

The Bank of England is now seen as almost certain to cut interest rates on Thursday, with the questions now being asked are whether it will reduce borrowing costs by half a point to 4.50 percent for the first time in seven years. There has been speculation the Bank of England might join the U.S. Federal Reserve and the European Central Bank in a simultaneous cut.

RBS was not the only British banking stock in trouble amid news reports that the chief executives of Britain’s largest banks met up with British Treasury chief Alistair Darling and Bank of England governor Mervyn King Monday night to discuss the possibility of the government providing funding, thought to be around 50 billion pounds, in exchange for stakes in the banks.

Lloyds TSB PLC, which is in the process of taking over HBOS PLC, was down 11.0 percent, while Barclays PLC, which has denied it is asking for government funding, was 4.5 percent lower.

Confidence has also drained away in Iceland, which, according to the Prime Minister Geir H. Haarde is facing the prospect of bankruptcy after its banks went on the acquisition trail across the continent, accumulating massive debts in the process. The government’s latest response was to nationalize its second-largest bank Landsbanki under day-old legislation and fixed its currency exchange rate.

Japan’s benchmark Nikkei 225 index erased some of its early losses to close down 3 percent at 10,155.90 — still its lowest level in almost five years.

Russia’s stock markets made early gains after trading opened several hours late Tuesday, a day after suffering steep plunges. The RTS exchange resumed normal trading at 1 p.m. local time and was up 2.6 percent to 889.1 points an house later. The MICEX, where most trading takes place, rose by 3 percent to 774.5 points. It opened at 1:15 p.m.

The euro was trading at $1.3682 versus $1.3516 late Monday.

Associated Press writers Kelly Olsen in Soeul, Jay Alabaster and Tomoko A. Hosaka in Tokyo and Tanalee Smith in Sydney, Australia and Alex Kennedy in Singapore contributed to this report.