Activity at European businesses hit a near three-year low in May, according to a survey by financial information firm Markit.
Its index, based on a survey of purchasing managers in the manufacturing and service sector, fell to a 35-month low of 45.9 in May.
A summit of European leaders on Wednesday evening failed to boost confidence, as leaders disagreed over how to tackle the crisis, the BBC reports.
French President Francois Hollande pushed for pan-European bonds that would allow struggling nations to raise money at much lower interest rates.
But Germany says it will oppose such a scheme until there is more budget discipline across Europe.
On the political crisis in Greece, EU leaders said they wanted the country to remain in the eurozone, but European Council President Herman Van Rompuy said it should respect its commitments.
Thursday's economic reports show that concerns over Greece are having a broader economic impact, according to economists.
Markit chief economist Chris Williamson said his firm's research indicated that the European downturn gathered further momentum in May.
He said in the report that survey was broadly consistent with gross domestic product falling by at least 0.5% across the region in the second quarter.
Activity at French and German factories fell to the lowest level in almost three years, according to the Markit survey.