No recession in Europe

Separately, Eurostat said that July inflation was still high but better than anticipated, posting a figure of 4 percent -- the same as June -- that it revised downward from a record high of 4.1 percent.

The rate was driven by higher prices for package holidays, housing services and transport fuel, it said.

High inflation is the euro economy's biggest problem as it eats into household spending -- the main engine of growth -- and hikes costs for companies and exporters.

Workers, facing higher prices at the gas pump and grocery store, are demanding more pay in the face of European Central Bank concerns that this would fuel an inflation spiral.

The ECB has reason to worry. Stripping out soaring fuel and food prices, underlying inflation is running worryingly high at 2.6 percent -- above the ECB's recommended guideline of just under 2 percent.

The bank in June hiked interest rates from 4 percent to 4.25 percent to try to cool inflation even though this risks slowing growth by increasing the cost of borrowing money in a tight credit market still suffering from the subprime banking crisis.

The 27-nation European Union also saw growth fall by 0.1 percent from the previous quarter, up just 1.7 percent from a year ago.

Only one EU country is now in recession: the previously fast-growing Baltic economy of Estonia. Growth was minus 0.9 percent in the second quarter and down 0.5 percent in the first.

Denmark also risks recession.