More evidence that Europe is on the road to economic recovery appeared yesterday when official figures showed that industrial production in the euro zone had increased by 0.3 per cent from April to June compared with the previous quarter.

According to the European Union's statistics agency, Eurostat, industrial output in the 15-nation EU as a whole rose by 0.4 per cent quarter on quarter.

The latest figures were particularly encouraging for the euro zone because they showed that output had turned positive in May after declining since last November.

The sharpest falls were in January and February, Eurostat said.

Industrial production from March to May rose by 0.2 per cent compared with the three months from last December to February, rather than falling by 0.1 per cent as originally estimated, Eurostat said.

For the EU as a whole, the rate from March to May was revised to a 0.2 per cent increase instead of zero growth.

The strongest growth rate between April and June was in Finland, which recorded a quarter-on-quarter increase of 1.1 per cent.

The biggest fall was in Belgium, where output dropped by 0.5 per cent.

The upturn in European industrial production is being accompanied by a gradual rise in inflation, which has caused the European Central Bank to hint it may move to a tightening bias in its monetary policy.

Preliminary figures released by four German states yesterday showed that annual inflation in Germany, the euro zone's largest economy, is likely to touch 0.8 to 0.9 per cent this month.

This is the highest inflation recorded in Germany for more than a year and compares with an annual rate of 0.6 per cent in July and 0.4 per cent in June.

The main cause of rising inflation is higher world oil prices.