(Adds details, UK PMI, market reaction, analyst comments)
* Euro zone services PMI at 25-month high in Dec
* Euro zone services new business index at 25-month high
* Euro zone composite PMI reaches 26-month high
By Jonathan Cable
LONDON, Jan 6 (Reuters) - The euro zone's services sector expanded at its fastest pace in over two years in December, albeit slightly slower than the flash estimate, while Spain saw a deeper contraction, a survey showed on Wednesday.
Markit's final Eurozone Services Purchasing Managers' Index of around 2,000 companies, ranging from banks to restaurants, rose to a 25-month high of 53.6 last month from 53.0 in November, but revised down from a flash estimate of 53.7.
"The further rise in the purchasing managers' business activity index in December suggests that euro zone GDP growth in the fourth quarter of 2009 at least matched the 0.4 percent quarter-on-quarter expansion achieved in the third quarter," said Howard Archer at IHS Global Insight.
Markets were little moved on the data.
This is the fourth consecutive month the index has been above the 50.0 mark that divides growth from contraction. But this comes after the index slumped to lows last year which were not seen in the index's 11 year history amid the worst recession in Europe since the Second World War.
Growth was led by buoyant activity in Germany and France, while Italy saw its index bounce above the 50.0 mark, in its biggest one month jump since April 2000.
But it was a different story in Spain, which saw activity decline further and at a faster pace than in November, marking two years of declining activity with scant signs of any recovery in the short term.
"The recovery is not being felt by all, and it is worrying to see Spain showing signs of a 'double dip' recession and lagging so far behind the other large euro area service economies," said Rob Dobson at data provider Markit. A separate report showed the UK services PMI rose to its highest level since September 2007.
The divergence was also seen in the manufacturing sector, but data released on Monday showed the euro zone as a whole saw growth for the third straight month.
The combined rises pulled the composite PMI up to 54.2 in December, from 53.7 in November, the highest reading since October 2007 and in line with an earlier flash estimate.
The services new business index rose sharply to 53.3 in December from 51.2 in November and above an earlier 53.0 flash reading. That is the highest level since November 2007 and is the fourth month above 50. The business expectations index also rose again after dipping in November and was revised up sharply from the flash.
But companies are still shedding workers.
The composite employment index remained negative for the eighteenth month at 46.1, down from a flash reading of 46.5 but up from November's 44.9.
Figures due on Friday are expected to show official unemployment rose to 9.9 percent across the bloc in November, up from October's 11-year high of 9.8 percent.
The European Central Bank has slashed interest rates to a record low of 1.0 percent and adopted a loose monetary policy in a bid to pull the economy out of a deep recession. This appears to have paid off, with figures due on Friday expected to confirm a return to growth of 0.4 percent in the third quarter. (Editing by Andy Bruce)