Eurozone February output contracts

LONDON - European services and manufacturing output unexpectedly shrank in February as the eurozone economy struggles to rebound from a contraction in the fourth quarter.

A eurozone composite index based on a survey of purchasing managers in both industries dropped to 49.7 from 50.4 in January, London-based Markit Economics said in an initial estimate on Wednesday. Economists had forecast a reading of 50.5, according to the median of 16 estimates in a Bloomberg News survey. A reading below 50 indicates contraction.

Budget cuts by governments may curb the pace of Europe's recovery as countries across the region battle the sovereign-debt crisis. At the same time, China's manufacturing may shrink for a fourth month in February, indicating the world's second-biggest economy remains vulnerable to a deeper slowdown as Europe's crisis caps exports.