Markets calmed as eurozone avoids recession

Markets managed a modest rebound this morning as news that strong German growth had helped the eurozone avoid recession provided an unexpected boost to the bulls.

Simon Denham, chief executive of Capital Spreads, said: “Despite the fears over Greece and the eurozone the FTSE is on the up this morning. It’s hardly surprising to see some sort of a bounce considering the markets have suffered quite heavy losses in recent days.”

He said that given the positive news from Europe, it might be a day for the bulls to win.

The eurozone economy was flat in the first quarter of the year when compared to the previous three-month period. Most economists had expected a minor contraction, which would have placed the eurozone in technical recession after its GDP fell by 0.3 per cent in the final quarter of last year.

Germany, Europe’s biggest economy, drove the better-than-expected figures as a strong export performance helped it grow by 0.5 per cent.

France’s economy was flat, suggesting that more peripheral countries suffered a decline in output.

Howard Archer, chief UK and European economist at IHS global insight, said Europe had escaped recession by the skin of its teeth.

He said: “Flat quarter-on-quarter eurozone GDP was primarily due to modest overall expansion in the core northern Eurozone economies led by Germany, countering appreciable overall contraction in the struggling southern periphery countries led by Italy, where contraction was a surprisingly awful 0.8 per cent.”