Page last updated at 16:09 GMT, Tuesday, 10 June 2008 17:09 UK

French and Italian output shocks

Factory worker
Some of Europe's biggest firms have already started to feel problems

France and Italy industrial output figures topped market expectations in April, but analysts warned the rebound was likely to be short-lived.

France's output increased 1.4% in April from March, while Italian industry output unexpectedly grew 0.7%.

The results are in stark contrast to the 0.8% decline in German industrial output announced last week.

An early Easter, which fell in March not April this year, was behind the improved performance, analysts said.

Italian output had been expected to decline 0.1%, while some analysts had forecast output in France would increase by 0.3%.

Sharp fall?

Marco Valli, an analyst at Unicredit, said more problems lay ahead.

"I think what we saw in April was simply a technical - and temporary - rebound," he said.

Record-high oil prices, a strong euro and high interest rates have all resulted in a weakened eurozone economy.

The worry for many observers now is that interest rates will have to rise to rein in price growth at a time when the economy is already slowing.

Earlier this month, the European Central Bank (ECB) President, Jean-Claude Trichet, hinted at an interest rate rise next month to stifle inflation which stands at about 3.6%.

The euro zone inflation target is 2%.

The ECB kept interest rates at 4% after a meeting in June.

Big fall in French factory output
09 May 08 |  Business
Euro inflation is 'uncomfortable'
02 Jun 08 |  Business
Trichet hints at future rate hike
05 Jun 08 |  Business

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