Euro zone factory PMI points to broad-based recovery

Euro zone manufacturing activity accelerated in October as new orders increased for the fourth month in a row,although strong competition left factories with scant room to raise prices,a survey showed on Monday.

Increasingly robust gains in production countries such as Spain,Italy and Ireland mean the blocs nascent recovery is becoming more broad-based,survey compiler Markit said. Their final Manufacturing Purchasing Managers Index (PMI) rose to 51.3 from Septembers 51.1,in line with an earlier flash reading and with the consensus forecast of economists. It hit a 26-month high of 51.4 in August. An index measuring output,which feeds into a composite PMI reading due on Wednesday and seen as a good indicator of growth,rose to 52.9 from 52.2. A reading above 50 signals an expansion in activity.

Healthy growth in Germany,Europes biggest economy,pulled the troubled region out of its longest recession in the second quarter,but it will probably only grow 0.2-0.3 per cent each quarter through to the end of next year.

Across the border in France,the euro zones second biggest economy,the manufacturing sector remained in contraction.