LONDON: The euro zone manufacturing sector contracted faster than previously thought last month, despite factories cutting prices, as core countries failed to provide any support, a survey showed on Monday. The downturn that began in the smaller periphery members of the 17-nation bloc is now sweeping through Germany and France and the situation remained dire in the region's third and fourth biggest economies of Italy and Spain. "Larger nations like France and Germany remain in reverse gear... the (manufacturing) sector is on course to act as a drag on gross domestic product in the third quarter," said Rob Dobson, senior economist at data collator Markit. Markit's final Purchasing Managers' Index (PMI) for the manufacturing sector fell from an earlier flash reading of 45.3 to 45.1, above July's three-year low of 44.0, but notching its 13th month below the 50 mark separating growth from contraction. "The rate of decline was a little slower than in July, providing some heart that the manufacturing downturn may be easing, but the sector is on course to act as a drag on gross domestic product in the third quarter," Dobson said. Having contracted 0.2 per cent in the three months to June the bloc's economy is seen posting similar results in the current quarter, with no growth expected until the start of next year. In its battle to support an economy ravaged by a two-and-a-half-year-old debt crisis, the European Central Bank is now widely seen cutting interest rates to a new record low of 0.5 per cent - either on Thursday or next month. Inflation jumped more than expected in August, data showed on Friday, a factor that may discourage the ECB from acting this week, but the PMI survey showed factories had cut the prices of their products for the third straight month. The output prices index fell from the flash reading of 48.9 to 48.6, above July's 48.3. The input costs paid by factories also fell for the third month.

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