(BRUSSELS) - The European Union and its member states released a raft of disappointing economic growth figures on Tuesday, just as investors were seeking good news in the maelstrom of the financial markets.

Gross domestic product (GDP) growth in the 13-nation eurozone slowed to a lower-than-expected 0.3 percent in the second quarter, compared with 0.7 percent in the previous three months, official EU figures showed. Those figures represent the least robust pace since late 2004.

In the 27-nation European Union as a whole, GDP growth was up by 0.5 percent from April-June, also down on the 0.7 percent rise registered in the first quarter.

The figures were "slightly down on the projections but nevertheless still at a very, very good level," a European Commission spokesman said.

However a Royal Bank of Scotland (RBS) report called that figures "a clear signal that the strength of the recovery remains questionable."

Economic growth over 12 months was 2.5 percent in the eurozone and 2.8 percent throughout the EU, compared to 3.1 percent and 3.3 percent respectively the previous quarter, according to the figures produced by Eurostat, the EU's statistical office.

Eurostat figures also showed that eurozone industrial production was actually down by 0.1 percent in June compared to May.

While the second quarter figures pre-date the current market turmoil induced by the US home loan sector crisis, they were unlikely to boost market sentiment.

Last week's events on the world stock markets are "a clear reminder" of the powerful links between the eurozone economy and the rest of the world, the RBS said.

"Today's GDP and industrial numbers are disappointing in that they demonstrate once again that the region has not been able to grow for long independently of major trading partners," the report added.

Howard Archer, chief European economist with analysts Global Insight, saw different factors weighing on growth in individual EU nations.

For example, German expansion was hit by a contraction in construction investment and sluggish consumer spending, while French activity suffered from a sharp loss of momentum in business investment and markedly negative net trade.

Earlier in the day individual EU member states published their national GDP figures.

The German and French economies both expanded by a lower-than-expected 0.3 percent in the second quarter.

The growth rate in Germany, the EU's biggest economy, was the lowest since 2005 amid a a construction slowdown, and for France it was the weakest growth since 2003.

"The French economy is not doing well. It needs an electric-shock treatment," Nicolas Bouzou at Asteres opined.

Dutch and Hungarian economic growth fell to just 0.2 percent in the second quarter. The rate was higher (0.8 percent) though still falling in Spain.

The latest EU figures, though a first estimate, were down on analysts' predictions of a 0.6 percent economic growth rise in the eurozone during the second quarter and 2.6 percent growth over a year.

Britain and France also logged lower inflation rates, with French inflation standing at 1.1 percent in July and Britain's 12-month inflation rate marking its biggest fall in over five years to 1.9 percent

With world markets in turmoil, the EU executive arm's economic and financial affairs department slightly lowered its eurozone economic growth estimates to 0.3-0.8 percent growth in the third quarter of 2007 and 0.2-0.8 percent in the final quarter.

Most analysts nevertheless expect the European Central Bank to bump up its base lending rate a quarter point to 4.25 percent in September

However Archer and others said that expectations of a hike to 4.5 percent by year end are likely to be reviewed.

The news came as the European Central Bank injected another 7.7 billion euros (10.5 billion dollars) into the money market to calm liquidity fears in the wake of the crisis in the US home loan sector.

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