(Updates with analysts' quotes, details)
* Euro zone Q4 GDP up 0.1 pct q/q, down 2.1 pct yr/yr
* Germany stagnates, France grows; Italy, Spain shrink
* Dec industrial production -1.7 pct m/m, -5.0 y/y
* Consumer spending tight as unemployment grows
By Marcin Grajewski
BRUSSELS, Feb 12 The euro zone's economic
recovery lost steam in the final quarter of last year as gross
domestic product barely expanded, with France the only one of
the currency area's four biggest economies to post growth.
The 16-country area's GDP edged up 0.1 percent in the
October-December period compared with the previous quarter, and
contracted by 2.1 percent from the last quarter of 2008, EU data
office Eurostat said in a flash estimate. [ID:nBRQ009717]
Analysts polled by Reuters had expected quarterly growth of
0.3 percent and a year-on-year decline of 1.9 percent.
Over the full year 2009, euro zone GDP fell 4.0 percent.
"It is disappointing -- only a few countries delivered,
mainly France," said Juergen Michels, economist at Citigroup.
The bleak figures could help deter the European Central Bank
from raising interest rates and press governments to maintain
fiscal stimulus programmes that bolster their economies.
The euro zone figure was dragged down by Germany, the area's
biggest economy, which registered quarter-on-quarter stagnation.
In France, the zone's second-biggest economy, GDP grew by a
better-than-expected 0.6 percent on the back of robust consumer
spending. The other largest economies, Italy and Spain,
contracted by 0.2 and 0.1 percent respectively.
Recession continued in Ireland, Greece and Cyprus, while
Portugal stagnated. Austria and the Netherlands expanded.
By comparison, the United States economy grew by 1.4 percent
quarter-on-quarter in the same period and by 0.1 percent in
In the third quarter, the euro zone economy expanded by 0.4
An uncertain growth outlook is expected to keep the European
Central Bank's main interest rate at a record low of 1.0 percent
until at least the fourth quarter of 2010, economists say.
But the bank has already started to pull back its emergency
lending measures introduced during the financial crisis.
"The likely fragility of the recovery means that both
governments and the ECB need to be wary about withdrawing
stimulus measures too soon or too aggressively," said Howard
Archer, chief European economist at IHS Global insight.
"This underpins our view that the ECB will keep interest
rates down at 1.0 percent until at least late 2010 and the bank
could very well delay lifting them until 2011," he added.
Analysts say any recovery from the biggest economic crisis
since World War Two is likely to be limited as growing
unemployment forces consumers to rein in spending.
The euro zone's jobless rate rose to 10 percent of the
workforce in December, its highest since August 1998.
"It seems likely consumer and fixed investment spending
continued to contract, while this was offset by positive
contributions from net exports, inventories and government
consumption," said Nick Kounis, economist at Fortis.
"Recovery in the euro zone is continuing, but at a snail's
pace," he added.
While GDP growth depends largely on government spending as
tens of billions of euros are pumped into the economy, bond
investors are growing increasingly nervous over deteriorating
public finances in many countries.
Financial problems in Greece have sparked talk about a
bailout for the country and raised doubts about stability in the
Industrial production figures compounded the gloomy picture.
Eurostat said euro zone production tumbled 1.7 percent in
December from the previous month, defying expectations of
growth, and sank 5.0 percent annually. [ID:nBRQ009716]
It was the biggest monthly decline since February 2009, when
production nose-dived 3.8 percent.
Some analysts cautioned that bad weather had played a role
in December's poor performance.
(Editing by Dale Hudson)