Euro zone in deepening recession, survey finds

LONDON (AP) - Europe appears headed for a deepening economic recession despite a recent easing in market concerns over the three-year debt crisis, a closely-watched survey found on Thursday.

Financial data company Markit said its purchasing managers' index - a gauge of business activity - for the 17-country euro zone fell to 45.9 in September from 46.3 the previous month.

The decline was a surprise as the consensus in the markets was for a modest improvement. Anything below 50 indicates a contraction in economic activity. September's rate was the lowest in over three years and came despite an easing in the rate of economic contraction in Germany, the euro zone's largest economy.

The decline also highlights the scale of the challenge facing European policymakers as they seek to get a grip on the debt crisis and may fuel hopes that the European Central Bank will cut its main interest rate further from the record low of 0.75 per cent.