Euro economic confidence hits 7-year low

BRUSSELS: Euro-zone economic confidence plunged to its lowest level in seven years in September, the EU said on Monday.

A regular survey of European companies and consumers showed the index of confidence in the economy falling to 87.7, close to a 2001 trough, the European Commission said.

The EU executive warned that the survey carried out in the first two weeks of September may not fully reflect growing gloom in the last few weeks as worries over a US and European recession widened on a financial market crisis.

Industry, services and construction were all more pessimistic than a month ago, it said, while consumer confidence was unchanged from a low level. Retailers were slightly more upbeat about their prospects.

It said industry managers' employment expectations fell, meaning they believe they may have to cut jobs, although services companies were more hopeful.

Consumers thought that unemployment would increase in future months and expect prices to rise.

The 15 nations that share the euro are battling high inflation as oil prices remain high, although below recent record levels, and increasing fears that a financial crisis will freeze or sharply hike the cost of borrowing.

That would slow growth as companies found it harder to get credit and people faced high costs to buy homes. The US government is trying to stave off tighter credit conditions by buying up hundreds of billions of dollars (euros) of bad debt from major lenders.