Italy's economy shrank by less than expected in the second quarter, adding to recent signs its longest post-war recession is bottoming out but still marking the eighth consecutive quarter of contraction.

Gross domestic product fell 0.2% following a 0.6% contraction in the first three months. It dropped by 2% on an annual basis, the national statistics bureau ISTAT said today.

Leading indicators over the last few weeks have suggested the Italian recession is easing and many analysts are predicting a return to very modest growth in the fourth or possibly even the third quarter.

It fits with a general easing of decline across much of the euro zone.

However, Italian political turmoil threatens to derail the fledgling recovery in the euro zone's third largest economy following last week's conviction of centre-right leader Silvio Berlusconi for tax fraud.

Prime Minister Enrico Letta yesterday appealed to political parties to show responsibility to keep his government afloat.

Over the whole of this year, GDP is expected to fall by around 1.8%, following the 2.4% contraction in 2012.

Letta, who took office in April at the head of a broad left-right coalition, faces an arduous task to try to stimulate the economy while keeping a rein on Italy's strained public finances.

ISTAT gave no numerical breakdown of GDP components with its preliminary estimate, saying only that activity had contracted in all the main sectors of activity - industry, services and agriculture.