Eurozone growth hit by high oil prices

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Economic Growth in the eurozone slowed over the autumn as its two largest members, France and Germany, almost ground to a halt, official figures showed yesterday.

Economic Growth in the eurozone slowed over the autumn as its two largest members, France and Germany, almost ground to a halt, official figures showed yesterday.

GDP growth in the 12-nation area for the three months to September slowed to 0.3 per cent, down from 0.5 per cent and its weakest out-turn for more than a year. The figures are the latest sign of the hurtful impact of the surge in oil prices and exchange rates on the world's largest economic bloc. It contrasted with the United States, its main rival, where retail sales and consumer confidence rose last month, showing that Americans had brushed off higher fuel costs.

Figures from Brussels showed the French economy hit the brakes in the autumn as GDP growth slowed from 0.6 per cent to just 0.1 per cent. On Thursday Germany said its economy slowed to 0.1 per cent, while yesterday the Netherlands said growth slowed from 0.4 to 0.2 per cent. Italy saw a slight uptick to 0.4 from 0.3 per cent.

Although there was no breakdown for the eurozone, France and Germany reported a large fall in exports that failed to be offset by a rise in domestic demand. Thomas Hueck, at HVB Group, said: "Europe is trapped in its over-dependence on the global economy. The euro area economy is in the middle of a soft patch [and] given the appreciation of the euro, the fallout will be felt this time."

There was little respite from the currency markets yesterday, where the euro continued to rise against the dollar as traders focused on mounting worries.

Separately, the European Commission cut its forecast range for growth for the final quarter of this year and first three months to 2005 to 0.2-0.6 per cent from 0.3-0.7 per cent.

On the other side of the Atlantic, US retail sales rose by 0.2 per cent last month as a sharp drop in car sales was offset by solid growth in other areas.

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