LONDON, Feb 22 Reuters The downturn in euro zone business activity eased in February, suggesting signs of recovery, as the dominant services sector broke a sixmonth streak of contraction and offset a deterioration in manufacturing, a survey showed on Thursday.

Last year, the bloc39;s economy stagnated, underperforming the rest of the world as former powerhouse Germany struggled with an industrial malaise that shows no sign of abating.

HCOB39;s preliminary composite PMI, compiled by SP Global, rose to 48.9 this month from January39;s 47.9, ahead of expectations in a Reuters poll for 48.5 but marking its ninth month below the 50 level separating growth from contraction.

Flash PMIs for February show that the euro zone may be on a slow path towards recovery. While encouraging, we still think the economy will struggle to gain traction this year, said Leo Barincou at Oxford Economics.

The economic downturn in Germany, Europe39;s largest economy, deepened this month as a slight improvement in services activity was unable to compensate for a surprisingly sharp deterioration in manufacturing.

However, the fall in French business activity eased considerably and business confidence strengthened to a sevenmonth high.

The European Union39;s economy is stronger as a result of the recovery fund, set up to drive postpandemic growth, the European Commission said on Thursday.

In Britain, outside of the EU, the economy kept up its early 2024 momentum with strong growth for services…