Shanghai Daily: Business - shanghaidaily.com
EUROPEAN service industries from airlines to banks expanded the least in more than two years in November as a United States housing slump increased the cost of credit globally and oil prices approached US$100 a barrel. Royal Bank of Scotland Group Plc's services index fell to 53.7 from 55.8 in October, according to a preliminary estimate. Economists expected the index to slip to 55.1, the median of 34 forecasts in a Bloomberg News survey showed. A reading above 50 indicates expansion. Higher oil prices and the euro's 13-percent gain against the dollar this year may curb economic expansion in 2008 by eroding export competitiveness and domestic demand. A surge in global credit costs following the collapse of the US subprime mortgage market is also weighing on the outlook for economic growth. "The worrying thing here is that services are a good indicator of domestic demand," said Sebastian Wanke, an economist at Dekabank in Frankfurt. "That's been dented more than we