Euro zone January business activity returns to growth -PMI

LONDON (Reuters) - Euro zone business activity made a surprise return to modest growth in January, adding to signs the downturn in the bloc may not be as deep as feared and

that the currency union may escape recession, a survey showed. S&P Global's flash Composite Purchasing Managers' Index (PMI), seen as a good gauge of overall economic

health, climbed to 50.2 this month from 49.3 in December. January was the first time the index has been above the 50 mark, which separates growth from contraction, since

June and the reading was ahead of the median Reuters poll forecast of 49.8. "The survey undoubtedly brings welcome good news to suggest that any downturn is likely to be far

less severe than previously feared and that a recession may well be avoided altogether," said Chris Williamson, chief business economist at S&P Global Market

Intelligence. A mild winter so far, falling gas prices and recent positive economic data meant some quarterly growth forecasts in a Reuters poll published on Monday were

upgraded although a technical recession was still predicted. In a sign they are growing more optimistic, firms increased headcount at a faster rate this month. The

employment index rose to a three-month high of 52.5 from 51.9 in December. The PMI covering the bloc's dominant services index also surprised to the upside, coming in at a

six-month high of 50.7. It was at 49.8 in December and the Reuters poll had a forecast for 50.2. Despite consumers facing large bills, demand only waned slightly. The new

business index was just shy of the breakeven mark at 49.8, up from 48.4.