Eurozone business activity up but Mideast conflict clouds horizon

The eurozone purchasing managers' index (PMI) published by S&P Global, an important gauge of the economy's overall health, registered a reading of 51.9 this month after a figure of 50 in June.

A reading above 50 indicates growth while a figure below 50 signals contraction.

Escalation in the Middle East has raised fears over the impact on the global economy as oil prices are surging again.

"July is seeing a welcome revival of economic activity in the eurozone, but a volatile geopolitical environment means it remains to be seen if the good news can last," S&P chief business economist Chris Williamson said in a note.

Williamson noted the improving picture for the European economy as "Germany is reporting growth for the first time in four months, France's downturn has softened to the weakest since February, and the rest of the region as a whole is growing at a pace not seen since last November".

But whether the good news is sustained in the months ahead "largely depends" on what happens in the Middle East, he said.

"With oil prices on the rise again in recent days and shipping worries escalating, there's a danger that the economy could relapse if inflationary pressures intensify again and supply disruptions, notably for energy, derail this nascent upturn," Williamson added.