Data from the Eurostat showed Thursday that production fell 0.1 percent month-on-month in November. Economists expected the rate of decline to remain unchanged from October's 0.3 percent.

The data "maintains belief that the manufacturing sector highly likely saw appreciable contraction in the fourth quarter of 2011 and contributed to an overall decline in Eurozone GDP," said Howard Archer, Chief UK and European Economist at IHS Global Insight.

Production in intermediate goods stagnated during the month, while consumer goods industry saw production falling from the October level. Energy production rose 0.5 percent on a monthly basis, following a 0.7 percent contraction in October.

Year-on-year, industrial output fell 0.3 percent after a 1 percent growth in October. This confounded economists' expectations for a 0.2 percent rise.

German industrial production fell 1 percent in November, while there were also declines in Spain and Portugal. However, French industrial production grew 1.1 percent and production in Italy rebounded 0.3 percent after a sharp drop over the previous two months.

Eurozone manufacturers are now very much on the back foot and finding life extremely challenging as domestic demand is hit by tighter fiscal policy across the region, squeezed consumer purchasing power, and heightened Eurozone sovereign debt tensions leading to tighter credit conditions and financial market turmoil, Archer noted.

The single currency bloc is widely expected to undergo a short period of recession this year, due to intensified debt troubles among euro members.

In a joint report on Wednesday, France's Insee, Germany's Ifo and Italy's Istat predicted a short recession in Eurozone with GDP declining 0.3 percent around the turn of the year and 0.2 percent in the first quarter of 2012 and stagnating in the second quarter.

The agencies said that given weak economic sentiment indicators, the expected deceleration in exports and further expected fiscal tightening in many member states of the euro-zone, euro area industrial production is likely to fall further by 2.1 percent in the next two quarters.

Reflecting weakness in the overall economic activity, industrial orders logged slower-than-expected growth in October. The latest purchasing managers' survey revealed that the downturn in the Eurozone factory sector continued for fifth month in December.

Furthermore, Fitch said on Tuesday that the Eurozone is set to face a shallow recession in 2012 as tough austerity measures continue to bite and consumer confidence remains weak.

The import price index increased 8.5 percent on an annual basis in November, slower than the 8.6 percent growth seen in October. In September, the rate of growth was 8.3 percent.

Import prices in the Eurozone market increased 1 percent year-on-year, while prices in the non-Eurozone markets climbed 15.5 percent in November.

On a monthly basis, import prices moved up 1 percent in November, after rising 0.2 percent in the previous month.

The Italian Treasury sold EUR 8.5 billion of 1-year Treasury bills or BOTs, matching target. The yield fell to 2.735 percent from 5.952 percent in the previous sale on December 13.

The agency also placed EUR 3.5 billion of 136-day paper, in line with its target.

Earlier, Spain raised double the target from the sale of its long term debt. The country sold EUR 9.98 billion versus a target of EUR 5 billion.

On a month-over-month basis, industrial production dropped 0.6 percent in November. Economists were expecting output to edge down 0.1 percent after a revised 1 percent contraction in October. Manufacturing production was down 0.2 percent, in line with expectations.

"Today's figures suggest that the industrial sector is heading straight back into recession," said Samuel Tombs, an economist at Capital Economics.

Meanwhile, industrial production declined 3.1 percent annually, faster than the 2.2 percent drop expected by economists. This was the biggest fall in production since December 2009, the statistical office said.

"Hopes that the manufacturing sector could see extended healthy growth and help the economy to see more balanced activity now seem a distant memory," IHS Global Insight chief economist Howard Archer said. "Indeed, the danger is now that the sector it is leading the economy into recession,"

Output from Mining and quarrying, energy and manufacturing all fell compared to the previous month, contributing negatively to the overall index. Basic metals and metal products industries were the largest contributor to the decline in factory output, with a 2.4 percent contraction in production.

Manufacturing output declined 0.6 percent year-on-year compared to the 0.5 percent drop expected by economists.

The overall impression is that manufacturers ended 2011 under serious pressure and face a difficult start at least to 2012, IHS Global Insight's Archer said.

The latest purchasing managers' survey by Markit Economics revealed that the manufacturing sector contracted again in December, though there were signs of stabilizing.

Business confidence hit a three-year low in December, according to a recent survey by Lloyds Banking Group PLC. Survey respondents predicted a 3-in-4 probability of a recession.

In its latest Quarterly Economic Survey released Tuesday, the British Chambers of Commerce said it expects the U.K. economy to stagnate overall until mid-2012, though the situation is better than those seen in the worst phase of the last downturn.

Last month, the Confederation of British Industry (CBI) urged the government to urgently rebalance its economy and make it less reliant on debt-fuelled consumer and government spending. Rebalancing is the only way to achieve securing future long-term growth, it said.

The Bank of England, which is set to announce its monetary policy decision later in the day, is expected to retain its key interest rate at a record low during. It is also likely to keep the asset purchase target unchanged at GBP 275 billion.

The unemployment rate increased to 18.2 percent in October from 17.5 percent in September. Economists expected the jobless rate to rise to 18 percent. In October 2010, the unemployment rate was 13.5 percent. Unemployment among youth, aged between 15 and 24, was 45.5 percent during the month.

The number of unemployed persons increased 5.3 percent month-on-month to 903,525 in October. Year-on-year, the number of jobless climbed 32.1 percent.

At the same time, the number of employed persons increased 0.4 percent from the previous month to 4.07 million in October. Annually, employment decreased 7 percent.

Industrial output edged down a seasonally adjusted 0.1 percent on a monthly basis in November, slower than the 0.3 percent decrease economists expected. The rate of decrease was slower than October's upwardly revised 0.3 percent decline.

Production of consumer goods fell 0.8 percent, while capital goods production and intermediate goods output remained stable. There was a 05 percent monthly growth in the production of energy during the month.

In EU27 also production dropped 0.1 percent month-on-month in November, after falling a revised 0.3 percent in the previous month.

Year-on-year, industrial output decreased 0.3 percent in November, reversing the previous month's 1 percent increase. Economists were looking for a 0.2 percent rise. In EU27, output edged down 0.2 percent annually, after rising 1 percent in October.

The Treasury reportedly placed EUR 4.27 billion of 4 percent July 2015 bonds. This is a new benchmark 3-year securities.

The agency also sold EUR 2.5 billion of 3.25 percent April 2016 bonds and EUR 3.211 billion of 4.25 percent October 2016 paper.

Month-on-month, industrial production dropped 0.6 percent in November. Economists were expecting output to fall 0.1 percent. Manufacturing production was down 0.2 percent, in line with expectations.

On a yearly basis, industrial production declined 3.1 percent annually, faster than the 2.2 percent fall expected by economists. Manufacturing output declined 0.6 percent year-on-year, marginally faster than the expected 0.5 percent drop.