While the Markit report showed an improvement, its composite gauge has been below 50, indicating contraction, for 16 consecutive months. The services index improved to 47.5 in May from 47 a month earlier.

The ECB forecasts the euro-area economy will shrink 0.5 percent this year, while the European Commission sees a 0.4 percent contraction.

“The euro zone's second recession in five years looks set to drag on into a seventh successive quarter,” Markit's chief economist, Chris Williamson, said in today's report.

“The ECB's quarter-point cut in interest rates seems to have done little to inspire confidence that the economy will/ start to pick up again,” he said. “In fact, expectations about the year ahead deteriorated again in the service sector, suggesting recovery remains a long way off still and that/ policymakers need to do more to stem the downturn and revive growth.”

Eoin Treacy's view While the ECB continues to make abundant liquidity available at the discount window, it has so far resisted the call to engage in quantitative easing. Many of the region's issues are structural and represent the growing pains of a political union which is still in its infancy. This has curtailed the ability of the European economy to rebound from its debt issues and remains a headwind. This also helps to explain the divergence in performance between European companies with truly global business models and those which chose to focus on Europe.

The Euro Stoxx 50 Index broke out of a four-month range two weeks ago and today's pullback suggests some consolidation of that gain is underway. It will need to hold above, or in the region of, the 200-day MA if medium-term potential for higher to lateral ranging is to be given the benefit of the doubt.

The FTSE-100 Index found support in the region of the 200-day MA from April and rallied for four consecutive weeks to test the upper side of its 13-year range below 7000. It pulled back sharply today suggesting that some consolidation of recent gains is underway. However a sustained move below the 200-day MA, currently near 6200, would be required to question medium-term scope for continued upside.