European shares slip, euro firm as data tees up ECB rate hikes

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LONDON : The euro held near a nine-month high against the dollar on Tuesday, though European stocks eased after regional business activity data reinforced expectations that the European Central Bank (ECB) will raise rates by a further 50 basis points.

Euro zone business activity made a surprise return to growth in January, according to a survey - the latest sign that the downturn in the bloc may not be as deep as feared.

S&P Global's flash Composite Purchasing Managers' Index (PMI) climbed to 50.2 this month from 49.3 in December, the first time it has been above the 50 mark since June.

Europe's broad Stoxx 600 index lost 0.4 per cent after the numbers, which analysts said suggests the ECB can continue to raise rates to curtail inflation, without worrying too much about damaging growth.

"For the ECB, this should seal the deal for a 50-basis point hike next week," said ING economists in a note.