Ireland experienced the strongest growth in industrial production in the euro zone in June, showing growth of 8.6 per cent, well ahead of other EU states.

Ireland was followed by Finland, which reported industrial production growth of 4.1 per cent. The weakest growth in output was recorded in Britain, which showed a decline of 4.3 per cent and in Belgium where output fell by 2 per cent.

Overall euro-zone industrial output was weaker than expected in June, suggesting economic growth in the 12-nation bloc remained modest in the second quarter.

The industrial production figures for Ireland reported by Eurostat, the EU's statistical office in Luxembourg, yesterday, showed a dramatic fall in industrial production in June of 9.6 per cent, which drew criticism from Fine Gael.

However, the Irish Central Statistics Office, which supplies these figures, explained to The Irish Times yesterday that the 9.6 per cent decline was submitted in error.

Eurostat, the European Union's statistics agency, said output grew 0.5 per cent month-on-month but fell 1.2 per cent on the year. Output growth was flat on the quarter after a 0.6 per cent rise in the first three months. Economists said the figures were consistent with second-quarter GDP growth in the euro area of between 0.2 per cent and 0.3 per cent.

Such a figure would mark a continuation of the sluggish 0.3 per cent growth recorded in the first quarter, reinforcing fears that the fragile upturn in the euro zone is struggling to gain momentum.

The Eurostat figures were released the day after the Bundesbank said economic activity in Germany remained subdued, in effect dashing hopes of strong recovery later this year.

It estimated second-quarter GDP growth at 0.25 per cent, barely above the weak 0.2 per cent pace of the first, and warned the euro-zone's biggest economy was still "vulnerable to new shocks".

The Bundesbank said the global economic recovery remained fragile and warned that tumbling stock markets might further erode investor and consumer confidence.

The weak data follow a clear deterioration in leading indicators, with the closely watched Ifo index of German business confidence falling unexpectedly in July.

But economists said the industrial production figures pointed to a modest underlying improvement since the first quarter, with all sectors showing gains on the month.

Mr Neville Hill of Credit Suisse First Boston said some indicators, such as German new orders, were still consistent with some further improvement in output. - (Additional reporting Financial Times Service)