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Italy service sector growth hits 12-month high in June - PMI

ROME (Reuters) - - Italy's services sector expanded at its fastest rate in 12 months in June, a survey showed on Friday, improving the prospects for a modest economic recovery to continue in the second quarter after three years of recession.

The Markit/ADACI Business Activity Index for services companies rose to 53.4 from 52.5 in May, marking its fourth straight month above the 50 mark that separates growth from contraction. A Reuters poll of 16 analysts had predicted a reading of 52.5.

The sub-index for new work at businesses from barbers to banks slipped to a four-month low of 52.7 from 52.9 in May.

Job growth also slowed and business confidence weakened to its lowest level this year. Markit said companies were highly optimistic for the coming year, but some expected activity to fall after Milan's Expo 2015 World Fair ends in October.

Markit's composite PMI for services and manufacturing ticked up to 54.0 from 53.7 in May, its highest level since last June.

Italy's economy is forecast to return to modest growth in 2015 after output rose 0.3 percent in the first quar ter, pulling clear of its longest recession since World War Two.

(Reporting by Isla Binnie)