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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 compared with the second quarter, according to official data. | |
For the 27-nation European Union, GDP was also 0.2% higher in the third quarter of the year. | |
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 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 tensions | Market 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. |