Growth in the services sector of the 12-country eurozone slowed for the 12th consecutive month in April, according to a key index.

The Reuters eurozone services data also revealed that during April new business activity in the services sector fell to its lowest level since July 1998 when the survey began.

The figures were published one day after a report suggested that the UK's services sector had suffered a sharp drop in its growth rate in April - hit by the double blow of the foot-and-mouth crisis and the US economic slowdown.

Earlier this week, new data suggested manufacturing was shrinking in the eurozone for the first time in more than two years, in what was seen as evidence that the US slowdown was spreading.

The European Commission on Friday said April business confidence in the eurozone had slumped from the month before, with its index falling to 0.36 from 0.58.

Rate cut resistance

More evidence of slower growth will add to the arguments of those urging central banks to trim interest rates.

The European Central Bank (ECB) has in recent months resisted cutting rates, believing eurozone economic growth to be sufficiently robust.

Those arguing against a rate cut also point to the inflation rate in the eurozone, which remains stubbornly above the ECB's target of 2%.

The US Federal Reserve has reduced rates four times this year in the face of a sharp slowdown in domestic growth - from 6.5% to 4.5%.

Germany and Ireland hit

The eurozone services activity index stood at 53 for April, down from 53.5 the month before and 62.2 a year earlier.

The index for new business activity slipped to 50.3 from 52.5 a month earlier and 61.8 in April 2000.

A figure of more than 50 signals economic expansion, less than 50 contraction.

The indexes showed growth of business activity had slowed most sharply in Germany and Ireland although the slowdown was across-the-board.

The same two countries were also the hardest hit in terms of new business activity, while Italy was the only index component achieving a rise in new activity.