Eurozone indicators to be released this week will show that growth in the 12-nation bloc picked up in fourth quarter 2004, although the recovery was patchy, analysts said. In Britain the data should show that retail sales firmed in January, the housing market improved and inflation dipped. Spain and France are expected to show strong fourth quarter momentum with Germany, Italy and the Netherlands recording more modest growth rates.
"We expect the fourth quarter GDP reports in the eurozone to paint a mixed picture, with France and Spain continuing to outperform Germany and Italy," said Jacques Cailloux of J.P. Morgan.
Spain is expected to match the 0.7 percent quarter-on-quarter growth rate already reported by France, but Germany, Italy and the Netherlands are all likely to post a 0.2 percent GDP increase.
The eurozone as a whole is expected to have grown 0.4 percent, marginally above the 0.3 percent third quarter increase but still below growth rates seen in the first half of the year.
Holger Schmieding of Bank of America said the slight improvement in eurozone activity was largely the result of a rebound in France, where the fourth quarter growth figure of 0.7 percent followed a stagnant third quarter.
And Germany is continuing to underperform, economists said.
In Britain the week will be dominated by the release of the Bank of England's quarterly Inflation Report on Wednesday, though the market will also be keeping a close eye on data for clues as to which direction interest rates might be heading next.
British indicators for the end of last year made for bleak reading, with retailers suffering their worst Christmas in 24 years, the housing market slowing and manufacturing heading towards recession.
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