The European Commission's latest economic forecast has said the recovery across Europe will be 'fragile' throughout 2010.
It is expecting just 0.7% growth for the euro zone and the whole EU, unchanged from its previous forecast.
The commission says the underlying message from the figures is that the European economy is recovering, but is facing uncertainty. It said risks to its forecast figures remained high, as recent turbulence on the financial markets showed.
The commission said industrial production and retail sales figures have been 'less promising', and investment remains weak.
Today's interim forecast is based on updated projections for France, Germany, Italy, the Netherlands, Poland, Spain and the UK - which account for around 80% of the EU's economic output. The commission's next full forecast is due in May.
Signs euro zone recovery is struggling
A closely watched survey of businesses and consumers has shown a fall in confidence in February, the first for 10 months.
'After 10 months of uninterrupted improvement, the rebound appears to have lost its momentum,' the European Commission said as it unveiled a fall by 0.1 points to 95.9 points for its economic sentiment indicator.
The latest data appeared to confirm a trend towards stagnation across Europe's economy, with separate figures also showing a drop in lending. While the index rose narrowly for the 27-nation EU, which also includes Britain and fast-expanding Poland, there was a big 1.9-point drop for France.
Separate figures from the European Central Bank showed that euro zone lending shrank further in January even though the overall amount of money in the zone edged higher.
Loans to the private sector declined by 0.6%, increasing the pace of a 0.1% decrease seen in December, the ECB data showed.
The ECB's M3 money supply indicator, which measures cash, deposits and some other financial items, increased by 0.1% in January, partially reversing a decline of 0.3% in December. In November, the M3 measure, a figure closely watched by the ECB in setting interest rates, had also fallen for the first time on record.
Lending and money supply data illustrate consumer demand and economic activity in general. A breakdown of the data showed that while loans to households continued a modest upward trend, credit to non-financial businesses fell again, to mark a decrease of 2.7% compared with January 2009.
Companies have reduced their demand for credit owing to the global slowdown, but economists warn that firms may find it harder to get loans as the economy improves, hampering a recovery.
