The euro zone surpassed the expectations of financial markets yesterday when official figures showed that gross domestic product had grown at a quarter-on-quarter rate of 1 per cent between July and September.

At the same time, inflation figures from France and the Netherlands suggest that consumer price pressures are still mild in two of the area's five largest economies.

Economists said the GDP data lent weight to the view that the euro zone is entering a phase of stronger activity, which should translate into annual growth rates of close to 3 per cent in 2000 and 2001 after about 2 per cent this year.

However, the data did little to support the euro, which lost gains made in New York on Thursday evening and was trading yesterday at $1.0140 in New York last night, having risen above $1.02 the previous night.

Eurostat, the European Union's statistical agency, said economic growth in the quarter had been driven by a rise in household expenditure and in gross fixed capital formation. Measured at an annual rate, GDP rose by 2.3 per cent between July and September.