Eurozone posts shrinking growth: EU

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The eurozone reported on Tuesday shrinking 0.2-percent growth in the second quarter of 2011, dragged down by a rapid decline in German performance and a stagnant France economy.

Moving in the opposite direction from the United States and Japan, which both logged steady improvement, Eurostat's second estimate showed the eurozone slowing from 0.8 percent growth in the first three months of 2011.

Powerhouse economy, Germany, saw growth collapse spectacularly from a downward-revised 1.3 percent to a meagre 0.1 percent expansion.

In France, the eurozone's second-biggest economy, growth was flat following 0.9-percent expansion in the first quarter.

Italy and Spain, each under pressure on bond markets with the European Central Bank being forced to step in to reduce lending rates, did better, logging 0.3 percent and 0.2 percent growth.

Another strong player, the Netherlands, saw a similarly sharp contraction in its rate of growth, from 0.8 percent to the same 0.1 percent level as Germany.

Private sector economic activity in the eurozone slowed even faster than initially thought in August, a closely-watched survey of purchasing managers also showed on Monday, leading analysts to tip a contraction in growth for the final quarter.

Figures for manufacturing last week showed that only Germany, the Netherlands and Austria showed growth in that sector, with France, Italy and Spain each slumping into negative territory.

© 2011 AFP

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