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Euro Zone Output Down in May as Recovery Remains Fragile

Thomas Barwick | Stone | Getty

Euro zone factory output fell in May for the first time in four months, data showed on Friday, suggesting a fragile and uneven recovery in the bloc that is struggling with record joblessness and renewed political tensions in southern Europe.

Industrial production in the 17 countries using the single currency fell 0.3 percent on the month, following a revised 0.5 percent increase in April, data from the EU's statistics office Eurostat showed.

Economists polled by Reuters had expected a 0.2 percent decline in May.

(Read More: ECB's Constancio: Policy to Remain Loose for a While)

Compared with the same period last year, factory output in May dropped as expected by 1.3 percent, after a 0.6 percent contraction in April.

Production in Europe's two biggest economies, Germany and France, dropped in May, with Italy and Spain showing small increases. Overall, factory output was dented by a 2.3 percent drop in the production in durable goods, such as cars and TVs.

Germany, France, and Italy account for two-thirds of the euro zone's industrial output.

(Read More: Portugal Throws New Curve Ball in Euro Debt Crisis)

The European Central Bank abandoned its traditional policy of never pre-committing on future interest rates in July and said it would keep rates at current or lower levels for an "extended period" to help the economy.

ECB Executive Board member Benoit Coeure has warned there is a risk that the euro zone recovery might be delayed a few quarters and, in a worst-case scenario, the common currency area might face a Japanese-style lost decade.

Exports, as well as gradually improving sentiment on global markets and record low interest rates, are seen as key drivers of the bloc's exit from its longest recession since the creation of the currency union in 1999.

But Europe's struggle to overcome its 3-1/2 year crisis has once again been underlined by new political uncertainty in Portugal, where the president's call for early elections in 2014 could risk a successful exit from the country's bailout program.

Contact Europe: Economy

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