Shares Rise On Euro Economic Growth Figures

European stock markets have risen following better than expected economic growth figures from nations which use the euro.

While Eurostat confirmed that euro area gross domestic product (GDP) contracted by 0.2% in the second quarter following a flat first three months of the year, the slowdown in Germany and France was not as bad as had been feared.

Germany's economy, Europe (Chicago Options: ^REURUSD - news) 's largest, grew by a larger-than-forecast 0.3% in the second quarter as consumer spending and strong exports helped stave off effects of the eurozone debt crisis, the Federal Statistical Office said.

Although lower than the 0.5% GDP growth recorded in the first quarter, the gain was greater than the 0.2% widely predicted by economists.

Exports were widely tipped to have been damaged by weakness in southern Europe and slowing growth in emerging markets.

France recorded its third consecutive quarter of zero GDP growth when contraction had been expected.

Stock markets reacted positively, with the FTSE 100 (Euronext: VFTSE.NX - news) up 0.5% in early trading.

The German DAX saw gains of 0.8% while there were similar performances on the main exchanges in France, Italy and in Spain.

Ironically the market gains could have been stronger had the GDP figures been weaker as traders would have taken them as a sign that more monetary stimulus was imminent.

ETX Capital trader Ishaq Siddiqi said: "Both (GDP) releases bode well for overall eurozone second quarter GDP figures ... though markets expect continued weakness in Spanish and Italian economies.

"As such, expectations for stimulus action by the European Central Bank will remain firmly supported as the outlook on the whole remains poor."