Euro zone economy sputters as China risks loom

Fri Aug 14, 2015 4:48am EDT
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By Paul Carrel

BERLIN (Reuters) - Germany enjoyed robust if unspectacular growth in the second quarter while the French economy stagnated, leaving policymakers looking at a fragile euro zone recovery and risks from volatile Chinese markets.

The German economy, Europe's largest, grew by 0.4 percent on the quarter -- a slight acceleration from 0.3 percent in the first three months of the year but below expectations for a 0.5 percent expansion as weak investment acted as a drag.

In France, a jump in exports was not strong enough to offset the impact of weak consumer spending and changes in inventories and growth came to a standstill after a strong first quarter.

Data for the whole of the euro zone is expected at 0900 GMT.

The readouts from the euro zone's two largest economies came a day after the minutes of the European Central Bank's last meeting showed it was concerned that volatility in Chinese markets may have more impact than expected on the euro zone.

China has seen a run of weak economic data.

The ECB described the recovery in the 19-country euro zone as moderate and gradual, a trend it called "disappointing", and said an increase in U.S. interest rates might slow the upturn.

Private sector economists are also concerned that Germany, Europe's powerhouse economy, is not growing faster despite favorable conditions.   Continued...

A steel-worker is pictured at a furnace at the plant of German steel company Salzgitter AG in Salzgitter, Lower Saxony on March 17, 2015.  REUTERS/Fabian Bimmer