The euro-area economy is back into a recession, for the second time in the last four years, as governments imposed tougher budget cuts and leaders struggled to control the debt crisis that started in October 2009.
The European Union’s statistics office in Luxembourg, Eurostat, stated that the gross domestic product in the 17-nation single-currency bloc has decreased with 0.1% in the third quarter, after a 0.2% decline in the previous three months.
Germany, France, Italy & Spain
In Germany, Europe’s largest economy, GDP rose 0.2%, after gaining 0.3% in the previous three months. The French economy expanded 0.2%, rebounding from a 0.1% contraction in the second quarter. Italy and Spain contracted 0.2% and 0.3%, respectively. In the 27- country EU, GDP increased with 0.1 %.
Greece & Portugal
Greece and Portugal have recently communicated third-quarter GDP figures, which showed the Greek economy contracting for a 17th straight quarter and the Portuguese economy in continuous recession for the past two years. By the end of 2012, Greek output will have dropped by a fifth since it started its recession in 2008.
On Thursday, European stocks decreased after data showed the euro zone is back into recession, hitting hard particularly on Netherlands. The FTSEurofirst 300 index of top European shares closed 0.9% lower at 1,078.64 points, a level not touched since early September, while Amsterdam’s AEX benchmark went down with 1.8%.
Shares in Franco-Dutch airline company, Air France-KLM, fell 8.5%, telecom group KPN lost 5.3% and retailer Ahold shed 2.2%.
Swiss and German stocks – which during this entire year have strongly outperformed other European markets – were among the worst hit, with HeidelbergCement down 2.6%, ThyssenKrupp down 2.3% and Roche down 1.8%.
Zurich Insurance Group tumbled 3.9% after the Swiss group posted a bigger-than-expected drop in quarterly net profit after a blow to its German general insurance business.
Against the trend on Thursday, Spain’s IBEX added 0.3% and some euro zone banks rallied on revived speculation that Spain might be about to get a bailout, one important condition for activating a bond-buying program directed by European Central Bank. Credit Agricole climbed 1.5%, Banco de Sabadell added 1.3% and UniCredit gained 0.7%.
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