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UPDATE 1-Euro zone Q4 growth stalls on weaker investment

Published 04/07/2010, 06:06 AM
Updated 04/07/2010, 06:32 AM

* Q4 GDP revised down to flat qtr/qtr (previous +0.1 pct)

* Q4 GDP revised to -2.2 pct y/y (previous -2.1 pct) (Recasts with economists' comments)

By Jan Strupczewski

BRUSSELS, April 7 (Reuters) - Euro zone growth stalled in the last quarter of 2009 as investment turned out weaker than expected, revised data showed on Wednesday, underlining the continued fragility of economic recovery.

The gross domestic product of the 16 countries using the euro posted zero growth quarter-on-quarter in the October-December period, rather than the previously reported 0.1 percent expansion, the European Union's statistics office said.

The economy contracted 2.2 percent year-on-year, more than the previously estimated 2.1 percent, Eurostat said.

The key change to the previous estimate was a deeper quarterly fall in private investment, which shrank 0.3 percent, rather than the previously reported 0.2 percent.

"It's a bit of a disappointment," Juergen Michels, economist at Citigroup, said of the GDP data.

"It's mainly due to a downward revision in the fixed capital formation bit and this downward revision overall probably takes into account that we got more data for Ireland and other places that were pretty weak," he said.

The fourth-quarter outcome also turned out weaker because the contraction in Italy was deeper than previously thought. The economy there shrank 0.3 percent rather than 0.2 percent quarter-on-quarter.

Growth in the Netherlands was 0.2 percent, instead of the previously reported 0.3 percent on the quarter.

Portugal, where growth was previously reported to have been zero on a quarterly basis, had a contraction of 0.2 percent.

Only exports and inventory growth prevented the euro zone from slipping back into negative growth as the contribution from government and household consumption was zero.

"Inventories added 0.1 percentage point to GDP, thereby dashing hopes that the slowdown in GDP growth had been at least partly the result of a further running down of stocks which would at least help growth going forward," said Howard Archer, economist at IHS Global Insight.

The positive contribution from net trade was 0.2 percentage point.

Separately, Eurostat said prices at factory gates in the euro zone rose 0.1 percent month-on-month in February, as expected by economists polled by Reuters, for a 0.5 percent year-on-year fall.

Economists had expected a 0.4 percent annual fall. (Editing by Dale Hudson)

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