The euro zone economy showed more signs of life today after the German economy expanded for the first time in over six months, and French consumer spending and Italian business confidence rose.
Germany's Federal Statistics Office said gross domestic product grew by 0.2 per cent in the first quarter from the final quarter of 2001, when it contracted by 0.3 per cent.
It was the first period of quarter-on-quarter growth in Europe's largest economy since the first quarter of 2001, when the growth rate was 0.4 per cent.
The data were better than a consensus forecast for growth of 0.1 per cent. But economists warned the foundations of the upturn were shaky, dependent largely on foreign demand, while domestic consumer spending remained sluggish.
French consumer spending has remained strong despite rising unemployment and political uncertainty ahead of parliamentary elections next month. Analysts expect it to contribute to a 0.4 per cent rise first quarter GDP data, due on Friday.
European Central Bank President Mr Wim Duisenberg repeated yesterday that the euro zone economy should accelerate at its non-inflationary growth rate, which the ECB puts at between 2 and 2.5 per cent, by the end of the year.
But he also warned there were doubts about the pace of the upturn and inflation.