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Eurozone economy grows 0.2% in third quarter Eurozone economy grows 0.2% in third quarter
(40 minutes later)
The economy of the 17-nation eurozone grew by 0.2% between July and September, boosted by France and Germany, according to official data. The economy of the 17-nation eurozone grew by 0.2% between July and September compared with the second quarter, according to official data.
The German economy grew by 0.5% in the quarter, while the French economy expanded by 0.4%. For the 27-nation European Union, GDP was also 0.2% higher in the third quarter of the year.
In Greece, the economy shrank by 5.2% in the same period, although that was not as bad as the 7.4% contraction of the second quarter. Most of the growth recorded by the href="http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-15112011-BP/EN/2-15112011-BP-EN.PDF" >Eurostat statistics agency came from Europe's biggest economies, Germany and France.
Economists expect the economies of the bloc to weaken. Economists expect Europe's economies to slow sharply in the final quarter.
The German economy grew by 0.5% in the July-to-September period, while the French economy grew by 0.4%, boosted by domestic demand.
In Greece, the economy shrank by 5.2% in the same period compared with a year ago, although that was not as bad as the 7.4% contraction of the second quarter.
Eurostat said both the eurozone and the wider EU registered annual growth of 1.4%.
Martin van Vliet, economist at ING, said: "The fact that the real economy still managed to grow amidst the escalating debt crisis is somewhat of a relief.
"However, looking beneath the surface, things don't look so rosy."
Jonathan Loynes, chief European economist at Capital Economics, said: "The key point is that this is all history. Forward-looking indicators suggest that the eurozone economy is likely to drop back into recession in the fourth quarter and beyond."
The head of the European Central Bank, Mario Draghi, has also predicted a "mild" recession for the end of this year.
Market tensionsMarket tensions
On the financial markets, the difference between interest rates on French and German bonds reached a record on Tuesday.On the financial markets, the difference between interest rates on French and German bonds reached a record on Tuesday.
The gap between the yields - or implied interest rates - on German and French 10-year bonds widened to 1.726 percentage points.The gap between the yields - or implied interest rates - on German and French 10-year bonds widened to 1.726 percentage points.
The yield on French bonds rose to 3.5%, while on German bonds it fell to 1.775%.The yield on French bonds rose to 3.5%, while on German bonds it fell to 1.775%.
That implies that France would pay about twice as much as Germany to borrow money if those rates were in force when the countries came to issue new bonds.That implies that France would pay about twice as much as Germany to borrow money if those rates were in force when the countries came to issue new bonds.
The gap between the rate of return between Germany and Spain's 10-year bonds also hit a record of 4.522%.
Spain paid sharply higher borrowing rates in its latest bond issue, with investors demanding more than 5% to lend the government money for 12 months and 18 months.
At a previous auction in October, investors accepted less than 4%.
Meanwhile, the yield on the Italian 10-year bond rose back above 7% after a change of government in the country failed to reassure the markets.
Ireland and Portugal asked for international bailouts after their bond yields went past that level.
Bond repayment rates are a key measure of market confidence in a country's ability to pay its debts.