Europe's dominant services economy produced some rare good news today as a survey indicated that business activity growth rose for the first time in more than a year in June.
However, with Germany slipping deeper into trouble, analysts said the euro zone still faces hard times.
Data today portrayed a twin-track euro zone economy by sector and by country, adding to the dilemma of the European Central Bank which makes a crucial decision on whether to cut interest rates tomorrow.
Crucially the index, based on a survey of over 2,000 companies, is holding above the 50 level which marks the dividing line between growth and contraction.
By contrast the equivalent index for manufacturers has wallowed below 50 for the past three months and shows little sign of recovery.
"It is a relief but I don't think you can get carried away with optimism," said Ms Jane Foley, an economist at Barclays Capital in London.
Many economists had expected the ECB to cut rates this week to slow the sharp drop in growth, but ECB President Mr Wim Duisenberg yesterday seemed to rule out a cut.
The ECB is reluctant to cut rates from the current 4.50 per cent because consumer price inflation is far above its two per cent ceiling.