Europe's debt crisis might have pushed its economy into a steeper contraction than earlier thought and growth in China is sputtering, according to surveys on Monday that pointed to a sharp global slowdown underway, according to Reuters. While the service sector in the United States grew at its slowest pace in nearly two years in November, it continued to display underlying strength, with sturdy gains in both new orders and business activity. The softer economic data from China and weak figures from the euro zone came at the start of a week that could prove crucial in resolving a debt crisis which threatens to tear apart Europe's common currency area - something that could have catastrophic implications for the world economy. The euro zone's composite purchasing managers index (PMI), while improving slightly month-on-month in November, still tallied with a 0.6 percent quarterly rate of decline for the last three months of this year. In the United States, the Institute for Supply Management said its services index fell to 52.0 last month -- the lowest since January 2010 -- from 52.9 in October. The reading was below economists' forecasts for 53.5. There was a rare piece of good news from Britain, where its services PMI unexpectedly rose last month, suggesting the UK may avoid recession, although perhaps not stagnation. While recession in the euro zone now looks a foregone conclusion, there are worrying signs the Chinese economy is starting to sag -- perhaps unsurprising given the European Union is China's biggest export partner. Chinese service sector growth cooled in November to its weakest pace in three months, further backing a view that authorities will have to fine-tune monetary policy again. German Chancellor Angela Merkel meets French President Nicolas Sarkozy on Monday to outline joint proposals for EU treaty changes that would involve tough sanctions for fiscally wasteful members. Then on Friday there is a wider EU summit that some see as make-or-break for the euro zone after a string of half-measures that have failed to stop bond market contagion spreading from Greece to Ireland, Portugal and now Italy and Spain. World stocks rose as confidence grew that European leaders would make big strides in solving the debt crisis. But the most recent Reuters polling of leading global economists suggests the euro zone will not survive intact in its current form, unless Europe's leaders are willing to take action on a scale not seen in the last few years.
