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As recovery pauses in November, divergences within eurozone economies deepen

LONDON/WASHINGTON -- Global growth was modest and a tepid expansion in the eurozone masked a growing disparity among its key members last month, data showed on Wednesday.

A buoyant Germany was not enough to stop the 17-nation eurozone's private sector losing momentum in November, dragged backwards by a downturn in France — the bloc's second biggest economy — and a continued recession in Italy.

Britain, which does not use the euro, broke a run of upside data surprises but still provided a strong economic backdrop for a twice-yearly government budget update due later this week.

Still, the data from across Europe echoed an earlier Chinese survey that pointed to steady growth in November. Figures due at 3:00 p.m. GMT are expected to show continued expansion among services firms in the United States.

“It's steady as she goes, but that's not a bad thing. We can look forward to 2014 with a lot more optimism than at any time in the past several years because many of the shoes that we were waiting to drop haven't,” said Peter Dixon at Commerzbank. “It could be better but it could be a lot worse.”

Markit's November eurozone Composite Purchasing Managers' Index (PMI), which monitors activity at thousands of firms across both the services and manufacturing industries, slipped to 51.7 from 51.9 in October.

That did, however, mark an improvement on an initial estimate of 51.5 and was the fifth straight month above the 50 mark that divides growth from contraction.

Britain's services PMI fell to a still very strong 60.0, its fifth highest reading since December 2006 — and all of the better ones have been since June this year.

In a further indication of strength, China's HSBC/Markit services PMI stood little changed at 52.5 in November, although a moderation of new business and prices-charged growth suggests the underlying momentum has started to soften.

Beijing has embarked on a sweeping restructuring drive and world's second-biggest economy has regained some momentum since mid-year after a protracted slowdown.

Any positive news will reinforce the government's hand as it pushes ahead with an ambitious agenda of reshaping the economy to boost domestic consumption at the expense of the traditional drivers of exports and investment.

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