Italy's economy needs to perk up in the second half of the year

Italy's economy contracted by 0.1% over the three months, according to the national statistics agency said.

An identical performance in the first three months of the year means Italy has now met the traditional definition of recession - an economy shrinking over two successive quarters - for the first time in 11 years.

The news adds to fears that growth across Europe overall is likely to be flat at best for the second quarter.

Italy is the first of the 12-nation eurozone's three biggest economies to report its performance.

Of the other two, Germany may well show contraction as well, while France's growth is expected to be stagnant at best.

Output falls

The figures hardly came as a surprise to economists, who widely blamed heavy stockpiling of goods at the beginning of the year which led to sliding output as the backlog was sold off.

June industrial output, for example, showed no gain on May and a 2.1% fall on the same month a year earlier - a reading described as "a very negative piece of data" by Susana Garcia at Deutsche Bank in Milan.

Sliding investment was also a problem, as was the strength of the euro which hurt exporters.