- Service sector activity in Italy contracted unexpectedly in March, fuelling concerns over the economic outlook of the euro zone’s third-largest economy, data showed on Thursday.

In a report, market research group Markit said that its Italian services purchasing managers’ index fell to a seasonally adjusted 49.5 last month from a reading of 52.9 in February. Analysts had expected the index to inch down to 52.0 in March.

A reading above 50.0 on the index indicates industry expansion, below indicates contraction.

Commenting on the report, Phil Smith, economist at Markit said, “March’s decrease in business activity, together with January’s, negates some of the gain seen in February, suggesting the service sector has made only a small contribution to first quarter GDP growth.“

Following the release of the data, the euro was little changed against the U.S. dollar, with EUR/USD easing down 0.02% to trade at 1.3763.

Meanwhile, European stock markets were mixed after the open. Italy FTSE MIB rose 0.15%, the Euro Stoxx 50 dipped 0.1%, France’s CAC 40 declined 0.2%, London’s FTSE 100 edged up 0.15%, while Germany''s DAX shed 0.1%.

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