(Updates with economists' comment, market reaction)
By Nigel Davies
LONDON, Nov 21 (Reuters) - Euro zone services and manufacturing business activity sank much further and faster than expected in November to record lows, pushing some economists to call for larger rate cuts from the European Central Bank.
A key survey of euro zone businesses published on Friday also showed that inflationary pressures are fading fast, making it easier for the ECB to cut rates further, as is widely expected by markets and economists.
The Markit Eurozone Purchasing Managers Index for services companies ranging from banks to restaurants fell to 43.3 in November from 45.8 the previous month, the lowest in the survey's 10-year history. That is well below the 50.0 mark that divides growth from contraction and some way lower than economists' predictions of 45.0.
Manufacturing is being hit even harder than the services sector, which accounts for most of the euro zone's economy. The manufacturing PMI tumbled to a record low of 36.2 in November from 41.1 in October, again much lower than the 40.5 forecast by economists.
But financial markets and the euro were largely unaffected by the data.
Export orders and overall orders both fell at the fastest pace on record, showing that the global financial crisis which began over a year ago is steadily eroding households' and companies' ability to keep spending.
Earlier data showed the euro zone's exporting powerhouse, Germany, recording a record low on the PMI measure of manufacturing activity, while in France both the manufacturing and services sectors showed record weakness.
"One word: terrible. The services side we had expected, but manufacturing is a shocker, it has really fallen a long way," said Dominic Bryant at BNP Paribas.
This demands further action by the ECB, which has lowered interest rates by 50 basis points twice since last month to 3.25 percent.
"We already have a 75 basis point cut priced in from the ECB in December with a trough of 1 percent in the first half of next year. Arguably on this data it should be a 100 basis point cut. We would not argue against it," Bryant added.
Data provider Markit said the PMI levels had been badly affected by the financial crisis. "Various sectors are struggling, but this is broad based: companies are really struggling to see demand," said Chris Williamson, chief euro area economist at Markit.
The combined falls sent the composite PMI index, covering manufacturing and services, tumbling to a record low of 39.7 in November from 43.6 in October.
Global inflation pressures that prompted the ECB to raise rates as recently as July are receding, helped by tumbling oil prices.
The measure of input prices for euro zone service sector eased to 55.1, its lowest since March 2004, from 57.5, while services companies had to cut the prices they charged customers. The prices charged index slipped to 47.7, its lowest level since July 2003, from 50.4 in October.
MANUFACTURING SHOCKER
Corporate gloom hit new depths as new business collapsed.
Seven of the 12 sub-indices used in the manufacturing PMI sank to record lows in November, while the measure of suppliers' delivery times hit a survey high, showing orders being filled at record speed due to scant demand.
The new orders index sank to 29.7 from 36.2 in October as demand dried up, almost half the 52.8 reading a year ago.
The amount of goods being made also looks to be grinding to a halt. The factory output index slumped to 33.1 from 39.8, and factories continue to lay people off -- the employment index fell to 41.3 from 44.4.
As global demand subsided, the input prices index hit a seven-year low, while prices charged fell to a five-year low.
(Editing by Ruth Pitchford/David Stamp)