Nov. 4 (Bloomberg) -- Europe’s services and manufacturing industries expanded for a third month in October as evidence mounted that the global economy is pulling out of the recession.

A composite index based on a survey of purchasing managers in both industries in the euro-area economy rose to 53 from 51.1 in September, London-based Markit Economics said today in a statement. That matched an Oct. 23 estimate for the gauge. A reading above 50 indicates expansion.

Europe’s economy returned to growth in the third quarter after record-low interest rates and emergency stimulus measures helped combat the deepest slump since World War II, according to European Commission estimates. The U.S., the world’s biggest economy, emerged from recession in the last quarter, data showed last week. The European Central Bank may decide tomorrow to keep its benchmark rate at 1 percent to fortify the recovery.

“The recovery is under way, but it will take some time to close the output gap in the euro zone,” said Lena Komileva, an economist at Tullett Prebon Plc in London. “It’s unlikely to alter the ECB’s cautious approach. This is a stimulus-driven rebound after a severe crisis.”

An index of services in the 16-nation euro region increased to 52.6 from 50.9, Markit said today. A gauge of manufacturing rose to 50.7, indicating the first expansion in 17 months, Markit said on Oct. 2.

Investment-Banking Unit

Societe Generale SA, France’s second-largest bank by market value, today said third-quarter earnings doubled as its investment-banking unit returned to profit. Hamburg-based Beiersdorf AG, the maker of Nivea skin cream, yesterday reported quarterly earnings that beat analysts’ estimates and raised its margin forecasts.

The euro-area economy may expand 0.7 percent next year and 1.5 percent in 2011 after contracting 4 percent this year, the Brussels-based commission, the European Union’s executive, said yesterday in its semi-annual economic forecasts. It previously forecast a 0.1 percent contraction in 2010.

The U.S. economy, the euro region’s second-biggest trading partner after the U.K., expanded at a 3.5 percent annual pace in the third quarter as government incentives spurred spending. The Reserve Bank of Australia this week raised its benchmark rate for the second consecutive month as the global economy recovers.

Some European banks are still showing the effects of the financial crisis, which has led to more than $1.6 trillion in writedowns and credit losses worldwide. UBS AG, Switzerland’s biggest bank, yesterday reported its fourth straight quarterly loss.

At tomorrow’s meeting, the ECB probably will keep its benchmark rate at 1 percent, according to all 56 economists in a Bloomberg News survey. The bank will announce the decision at 1:45 p.m. in Frankfurt.

To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net

Last Updated: November 4, 2009 04:19 EST