Europe's economy stuck in doldrums

Europe's manufacturing and services industries unexpectedly shrank and German business confidence slumped in June, increasing concern the European Central Bank's plan to raise interest rates next month will hurt economic growth.

Royal Bank of Scotland Group Plc's composite index fell to 49.5 from May's 51.1, the first time it dropped below 50 in five years. A reading under 50 indicates contraction. The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, declined to 101.3 from 103.5. That's the lowest since January 2006.

"The ECB is taking an unprecedented risk with euro-area growth by raising rates," said Jacques Cailloux, chief euro-area economist at Royal Bank of Scotland in London. "The data clearly show that growth will be weaker than the bank expects and are historically consistent with the ECB cutting interest rates."