The global credit crunch knocked down eurozone private sector growth to a two-year low in September as new orders plunged, a survey showed yesterday, making any further interest rate hike this year unlikely.

The figures provide clear evidence that turmoil - which has seen stock and foreign exchange markets swinging wildly and the European Central Bank pumping temporary funds into money markets to alleviate soaring rates - has affected the real economy.

The services sector took the hardest hit, with the RBS/NTC Economics flash services PMI down four points to 54.0 from 58.0, the worst tumble in the nine-year history of the index and the lowest level since August 2005.

"This is a very bad surprise . . . the plunge in the services index is completely unexpected," said Aurelio Maccario at Unicredit MIB in Milan. "Clearly, the headline has been heavily affected by the financial markets crisis."

Eurozone manufacturing activity also was not immune from violent gyrations in markets WHICH have seen interest rates chopped aggressively in the US and triggered downward revisions to economic growth forecasts there and in Europe.

The RBS/NTC flash manufacturing PMI fell to 53.2 from 54.3 in August, its lowest point since November 2005 and also weaker than the 53.9 consensus forecast in a Reuters poll.

Both indexes remain well above the 50 mark that separates growth from contraction, but the dramatic falls will further support the view that the European Central Bank has likely put off any further interest rate hike well into the future.

"With deteriorating confidence and the ongoing rally, there is no room left for further tightening in 2007," said Maccario.

The flash composite PMI, which measures manufacturing and services together, tumbled to a two-year low of 54.5 in September from 57.4 in August. NTC said the data was collected between September 12th and 20th and about 15 per cent of total flash responses came in after the US Federal Reserve cut rates on Tuesday, adding that it was tough to gauge how broad-based the deterioration really was.

"The four-point drop is probably by and large due to the financial services uncertainty," said Rainer Guntermann at Dresdner Kleinwort, who said a slowdown in the manufacturing sector in previous months had finally caught up with the services sector.