Investing.com - Manufacturing activity in the euro zone expanded at the fastest pace in 26-months in August, fuelling optimism over the region’s economy, preliminary data showed on Thursday. In a report, market research group Markit said that its preliminary manufacturing purchasing managers’ index rose to a seasonally adjusted 51.3 in August from a final reading of 50.3 in July. Analysts had expected the index to inch up to 50.8 in this month. On the index, a reading above 50.0 indicates industry expansion, below indicates contraction. The report also showed that service sector activity in the euro zone improved to a 24-month high in August. The preliminary services purchasing managers’ index rose to a seasonally adjusted 51.0 this month from 49.8 in July, above expectations for an increase to 50.2. Commenting on the report, Chris Williamson, Chief Economist at Markit said, “So far, the third quarter is shaping up to be the best that the euro area has seen in terms of business growth since the spring of 2011. The economic picture from the surveys is therefore coming into line with policymakers‟ expectations of a modest yet still fragile return to growth.� Following the release of the data, the euro turned higher against the U.S. dollar, with EUR/USD easing up 0.05% to trade at 1.3361. Meanwhile, European stock markets added to gains. The EURO STOXX 50 rose 1.2%, France’s CAC 40 added 1%, London’s FTSE 100 inched up 0.9%, while Germany's DAX rallied 1.1%.

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