Euro economy loses punch

Euro economy loses punch
(02:05) Report
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Aug 14 - Europe's economy lost steam in the second quarter of 2007 as growth in some large economies slowed more sharply than expected.

News of this economic slowdown in Germany, France and Italy has prompted questions over the logic of another rise in European Central Bank interest rates.

The second quarter numbers preceded recent financial market turmoil, but there are now increased fears that defaults in the U.S mortgage market could snowball into something big enough to unravel otherwise healthy forecasts for growth in Europe and the rest of the world in 2007 and 2008.

Joanna Partridge reports for Reuters

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