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| Eurozone economy grows 0.2% in third quarter | Eurozone economy grows 0.2% in third quarter |
| (about 6 hours 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. | 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 Eurostat statistics agency also recorded GDP growth for the 27-nation European Union at 0.2% in the third quarter of the year. | The Eurostat statistics agency also recorded GDP growth for the 27-nation European Union at 0.2% in the third quarter of the year. |
| Economists expect Europe's economies to slow sharply in the final quarter. | Economists expect Europe's economies to slow sharply in the final quarter. |
| The figures came as the difference between interest rates on French and German bonds reached a record. | The figures came as the difference between interest rates on French and German bonds reached a record. |
| 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. |
| 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. | 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. |
| The Irish Republic and Portugal asked for international bailouts after their bond yields went past that level. | The Irish Republic 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. Germany is seen as the most reliable borrower in Europe. | Bond repayment rates are a key measure of market confidence in a country's ability to pay its debts. Germany is seen as the most reliable borrower in Europe. |
| German shares closed the day down, with the Dax shedding 0.87%. In France, where there are greater worries about government debt, the Cac ended the day down 1.92%. | |
| Greek woes | Greek woes |
| Most of the growth recorded by the Eurostat statistics agency came from Europe's two biggest economies, Germany and France. | Most of the growth recorded by the Eurostat statistics agency came from Europe's two biggest economies, Germany and France. |
| 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, but France's second-quarter figures was revised down to show its GDP shrank by 0.1% in that period. | 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, but France's second-quarter figures was revised down to show its GDP shrank by 0.1% in that period. |
| 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. | 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. |
| Later on Tuesday the new Greek government said it would submit plans to overhaul the tax system by early next year. | |
| "We must provide by the end of February... a widely accepted proposal on the new tax system," Finance Minister Evangelos Venizelos told parliament. | |
| 'Not so rosy' | |
| Eurostat said both the eurozone and the wider EU registered annual growth of 1.4%. | 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. | 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." | "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." | 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. | The head of the European Central Bank, Mario Draghi, has also predicted a "mild" recession for the end of this year. |
| Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule. Glossary in full Market tensions | Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule. Glossary in full Market tensions |
| On the financial markets on Tuesday, the yield on French bonds rose to 3.5%, while on German bonds it fell to 1.775%. | On the financial markets on Tuesday, 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%. | 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. | 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%. | At a previous auction in October, investors accepted less than 4%. |