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Euro zone third-quarter growth unexpectedly steady, inflation slows on cheaper energy

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Euro zone third-quarter growth unexpectedly steady, inflation slows on cheaper energy
FILE PHOTO: European Union (EU) flags fly in front of the European Central Bank (ECB) headquarters in Frankfurt, Germany, December 3, 2015. REUTERS/Ralph Orlowski/File Photo   -   Copyright  Ralph Orlowski(Reuters)
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BRUSSELS (Reuters) – Euro zone economic growth in the third quarter defied market expectations of a slowdown and was steady quarter-on-quarter, preliminary data showed on Thursday, while headline inflation slowed because of a sharp fall in energy prices.

The European Union’s statistics office Eurostat estimated gross domestic product in the 19 countries sharing the euro grew 0.2 percent in the July-September period against the previous three months, the same as in the second quarter.

Economists polled by Reuters had expected growth of only 0.1%. But GDP data for Germany, the euro zone’s biggest economy, is only due on Nov 14, so the Eurostat estimate for the whole euro zone could be revised downwards if market expectations of negative third quarter growth in Germany are confirmed.

Separately, Eurostat said euro zone consumer prices rose 0.7 year-on-year percent in October, down from 0.8 percent year-on-year in September.

The European Central Bank wants to keep inflation below, but close to 2% over the medium term, but despite years of quantitative easing and negative interest rates it has failed to bring price growth closer to its target.

The slower inflation in October was mainly due to a sharp drop in energy prices. Without that volatile component and excluding also unprocessed food prices, inflation was stable at 1.2%.

An even more narrow inflation measure excluding also alcohol and tobacco, rose to 1.1% in October from 1.0% in September.

Eurostat also said that unemployment in the euro zone in September was stable at 7.5% of the workforce, the lowest level since July 2008, but in absolute terms, the number of people without a job edged marginally higher to 12.335 million from 12.302 million in August.

(Reporting By Jan Strupczewski; editing by Francesco Guarascio)

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