Eurozone manufacturing hit reverse gear in August, tumbling to a two-year low in another worrying sign the wider economy is slowing fast, a key survey showed on Sept. 1. The eurozone manufacturing purchasing managers' index compiled by research giants Markit fell to 49.0 points in August from 50.4 in July.

Manufacturing output fell across the 17-nation eurozone as a whole for the first time in just over two years while new orders decreased for the third month running and at the quickest pace for 26 months, Markit said.

Only Germany, the Netherlands and Austria showed manufacturing sector growth, with France, Italy and Spain slumping into negative territory.

Analysts said the data, especially a persistent decline in new manufacturing orders, showed the risk of recession in debt-laden Europe appeared to be on the rise.  With the eurozone economy slumping to growth of just 0.2% in the second quarter, chief Markit economist Chris Williamson warned of "a growing risk that the eurozone could slide back into recession in the second half of the year."

Williamson added: "Worryingly, Germany saw new export orders fall at the fastest rate of all countries surveyed, meaning the eurozone can no longer rely on export-led growth in its largest member state to help sustain even a lackluster recovery for the region as a whole."

Howard Archer, chief European economist at London-based IHS Global Insight, said the data "fuels concern that eurozone growth is in serious danger of grinding to a halt.

"The eurozone is clearly struggling in the face of tighter fiscal policy across the region, heightened sovereign debt tensions and financial market turmoil," he said.

"Also importantly, slower global growth has clearly hit foreign demand for eurozone goods and services pretty hard."

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