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EUROPE ECONOMY UNEXPECTEDLY STALLED IN FOURTH QUARTER

By NBF NEWS
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Germany, France and Italy, the euro area's three largest economies, probably expanded 0.9 per cent in the first three months of 2010 and may grow 1.9 per cent in the current quarter, the Paris-based OECD said. The US economy probably grew 2.4 per cent in the first quarter, it estimates.

more than previously estimated, Bloomberg reported on Wednesday.

Gross domestic product in the 16-nation euro region remained unchanged compared with the third quarter, when it rose 0.4 per cent, the European Union's statistics office in Luxembourg said.

It had previously reported a fourth- quarter expansion of 0.1 per cent. Corporate investment dropped 1.3 per cent instead of the 0.8 per cent estimated earlier.

The European economy is now showing signs of rebounding from its end-of-year relapse as the global recovery prompts companies to step up investment and offsets some concerns that Greece's fiscal crisis will hurt the euro region. While unemployment is at an 11-year high, economic confidence improved in March and the region's services and manufacturing growth accelerated to the fastest pace since August 2007.

'The first quarter was still very weak followed by an economic rebound in current three-month period,' said an economist at Commerzbank AG in Frankfurt. Mr. Christoph Weil, 'Exports will continue to drive an expansion this year.'

The euro was little changed after the Gross Domestic Product release, trading at $1.3353 in Frankfurt, down 0.3 per cent on the day. The yield on the German 10-year benchmark bond dropped 0.3 basis points to 3.11 per cent.

Euro-area exports increased 1.9 per cent in the fourth quarter from the previous three months, more than the 1.7 per cent gain estimated earlier, the report showed. Household consumption was unchanged in the latest quarter, and government spending declined 0.1 per cent after rising 0.7 percent in the previous period.

Solvay SA, the world's biggest soda-ash maker, reduced capital spending by 57 per cent last year to the lowest amount in five years. Nyrstar NV, the largest zinc producer, lowered its capital spending by 41 per cent in 2009 and plans a 60 per cent increase this year as it moves to restart operations at idled mines.

Asian economies are leading a worldwide recovery from the worst slump since World War II. The International Monetary Fund forecasts the global economy will grow 3.9 per cent this year after a 0.8 per cent contraction in 2009, with China expanding 10 percent, almost five times the pace projected for the United States. The euro-area economy may grow one per cent, the IMF forecast.

Data 'point to a continued recovery of the world economy, albeit at variable speeds across countries and regions,' the Organization for Economic Cooperation and Development said in a report today. 'A number of factors are expected to bear down on activity in the very near term.'