European Economy Grows More Than Expected

Economic growth in Europe accelerated more than economists forecast in the third quarter as company investment in factories and equipment rebounded.

The economy of the 13 nations that share the euro expanded 0.7 percent from the second quarter, when it grew 0.3 percent, the European Union's statistics office in Luxembourg said today. That was above the 0.6 percent median estimate of 41 economists in a Bloomberg News survey. From a year earlier, third-quarter growth was 2.6 percent, up from a 2.5 percent rate in the previous period.

The pickup in growth may prove short-lived as Europe's economy contends with higher credit costs stemming from the U.S. housing slump, the euro's increase to a record against the dollar and oil prices above $90 a barrel. The European Commission last week cut its forecast for euro-area growth next year to 2.2 percent from 2.5 percent.

The euro rose the most in seven weeks today against the dollar, reaching $1.4713, and last traded at $1.4682. Europe's Dow Jones Stoxx 600 Index added 0.4 percent to 370.15 at 1:10 p.m. Brussels time.

Economic growth in both Germany and France, the euro area's largest economies, accelerated to 0.7 percent in the third quarter from 0.3 percent in the previous three months, according to separate reports today. Italy's economy grew 0.4 percent in the latest quarter after 0.1 percent in the prior period, figures published yesterday showed.

Signs of weakening growth emerged toward the end of the third quarter. Industrial production in the euro area fell 0.7 percent in September, while manufacturing grew at the slowest pace in more than two years in October. In Germany, investor confidence fell to a 15-year low this month, according to figures published yesterday. Crude oil has risen 57 percent in the last 12 months and reached almost $100 a barrel last week.

European Economy Grows More Than Expected, Bloomberg
11/14/2007 5:24:19 AM