Eurozone growth stalls

Eurozone growth stalled in the last quarter of 2009 as investment turned out weaker than expected, revised data showed on Wednesday, but a benchmark survey suggested this year's fragile recovery is gaining traction. The gross domestic product of the 16 countries using the euro posted zero growth quarter-on-quarter in October-December, rather than the previously reported 0.1 percent expansion, the European Union's statistics office said.
In Greece, where an escalating debt crisis has in recent days pounded the single currency and fuelled speculation over a possible European bailout, the recession deepened to a quarterly contraction of 0.8 percent. The eurozone economy contracted 2.2 percent year-on-year, more than the previously estimated 2.1 percent, Eurostat said.
Markit said its final Eurozone Services Purchasing Managers' Index of around 2,000 companies, ranging from banks to hotels, jumped to 54.1 in March from 51.8 in February, revised up from a flash estimate of 53.7 released two weeks ago. That is its highest reading since November 2007 and marks the seventh month the index has been above the 50.0 mark that divides growth from contraction.
Underlining the growth discrepancies within the eurozone, Finance Minister George Papaconstantinou said on Wednesday the country's banks, hit by a series of credit rating downgrades, had asked the government for billions of euros of extra support. The Organisation for Economic Co-operation and Development (OECD) forecast on Wednesday that annualised, quarter-on-quarter euro zone growth would be 0.9 percent in the first three months of 2010 and 1.9 percent in the second quarter.
The OECD's chief economist Pier Carlo Padoan told Reuters the eurozone's biggest economy Germany, where GDP stagnated in the fourth quarter, could help boost the region's growth. The key change to the previous estimates for eurozone GDP in the fourth quarter was a deeper quarterly fall in private investment, which shrank 0.3 percent, rather than the previously reported 0.2 percent.
The fourth-quarter outcome also turned out weaker because the contraction in Italy was deeper than previously thought. The economy there shrank 0.3 percent rather than 0.2 percent quarter-on-quarter. Growth in the Netherlands was 0.2 percent, instead of the previously reported 0.3 percent on the quarter. The positive contribution from net trade was 0.2 percentage point. Separately, Eurostat said prices at factory gates in the eurozone rose 0.1 percent month-on-month in February, as expected by economists polled by Reuters, for a 0.5 percent year-on-year fall. Economists had expected a 0.4 percent annual fall.