Portugal Colonial - Eurozone growth beats expectations in third quarter

The EU's data agency said the 20-country single currency area recorded growth of 0.2 percent over the July-September period from the previous quarter.

The figure was higher than the 0.1 percent forecast by analysts for Bloomberg and FactSet -- but economists sounded a note of caution for the future.

"While we do expect a gradual acceleration of growth over the coming year, we remain cautious about marking this as the start of a growth spurt, given domestic and global uncertainty," ING Bank's Bert Colijn said in a note.

Thursday's data also showed the eurozone economy grew by only 0.1 percent in the second quarter of this year.

The data arrived as the European Central Bank is expected to keep its key deposit rate steady later on Thursday.

The 27-country European Union economy expanded by 0.3 percent, after recording 0.2 percent growth between April and June.

The eurozone economy was supported by surprising data from France.

Despite political instability linked to the country's massive debt and deficit, the French economy grew by 0.5 percent in the third quarter.

The surprise was thanks to a jump in investments and exports "in part because of a strong aerospace sector, which tends to see volatile production", Colijn said.

Spain's economy also grew by 0.6 percent between July and September, but it slowed down from a whopping 0.8 percent in the previous quarter.

But Germany, Europe's biggest economy, stagnated in the same period although it narrowly dodged a recession.

The Italian economy also failed to grow between July and September.

- German struggles -

In September, the ECB raised its growth forecast for 2025 to 1.2 percent.

Despite eking out growth in the third quarter, economists warned against reading too much into the data and what it means for the future.

France's political turmoil risks being a drag, especially as France's hung parliament remains locked in debate over next year's budget.

Meanwhile, Germany's planned public spending blitz "continues to struggle to make stimulus plans turn into GDP growth", Colijn said.

ECB officials are gathering in Florence, Italy, on one of their regular tours away from the central bank's Frankfurt headquarters, with the rate decision set to be published at 1315 GMT.

L.Carrico--PC