The euro hit a fresh 22-month low and European shares gave up early gains on Thursday after data showed Europe's economic slump has worsened, as talk of a Greek exit and a lack of progress in tackling the debt crisis hits business confidence, according to Reuters. Germany's manufacturing sector shrank at the fastest rate in three years in May, the Markit manufacturing Purchasing Managers Index (PMI) showed, as both exports and new orders coming into factories declined. "May's drop in manufacturing production was the steepest in nearly three years and the current period of falling new orders now almost matches the length, though not the depth, of the contraction in 2008/09," Tim Moore, senior economist at Markit, said. German business sentiment has also dropped for the first time in seven months, missing even the most conservative forecasts, the Munich-based Ifo think tank said. PMI data for the whole euro area, showing activity was declining at a faster pace than expected, confirmed the view that a downturn which started in smaller periphery members is taking root in the core countries of Germany and France, whose tepid growth had been keeping the troubled bloc afloat. German Bund futures, which have tracked the flight to safety by investors, rose to record highs after data and a rush by investors into dollars pushed the currency's index against other major currencies to its highest level in 20 months, rising 0.2 percent 82.25. The euro dropped to $1.2540, its lowest level since July 2010. The FTSE Eurofirst index of top European shares, which had opened up 0.5 percent, gave up its gains to be down slightly at 971.90. The wider MSCI world equity index fell 0.1 percent to 299.49.
