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Decline in German services sector eases, raising hopes for milder recession -PMI

BERLIN (Reuters) - High inflation and economic uncertainty extended a downturn in the German services sector in December, though a slower pace of decline in activity adds to hopes of a milder-than-expected recession, a survey showed on Wednesday.

S&P Global's final services Purchasing Managers' Index (PMI) rose to 49.2 from 46.1 in November. That marks the highest reading since July, when the current downturn began, and was slightly above a flash estimate of 49.0.

Slower input cost and output charge inflation were a further sign that underlying price pressures have passed their peak, said Phil Smith, economic associate director at S&P Global, though they were still among the highest levels on record.

"Encouragingly, however, the downturn has lost momentum, which together with a slower decline in manufacturing production at the end of the year adds to the hopes that any recession will be milder than initially feared," said Smith.

The German composite PMI index, which comprises both the services and manufacturing sectors, rose to 49.0 in December from 46.3 in November, slightly above a flash reading of 48.9.

December marked the sixth month in a row that the reading was below the 50 mark that separates growth from contraction.

(Reporting by Miranda Murray; Editing by Susan Fenton)