Italy, France Stuck in Economic Doldrums

Shrinkage and loss of confidence

Italy's economy shrank more than initially reported in the first quarter and French industrial confidence stalled in May, as the euro area struggled to emerge from a record-long recession.

Italian gross domestic product fell 0.6 percent from the previous three months, the Rome-based National Statistics Institute, said today, after a May 15 estimate of a 0.5 percent drop. A French index of sentiment among factory managers was unchanged at 94, while an index of service companies fell to 88 from 89, according to the Bank of France.

"We don't expect recovery this year in Italy or at the European level," said Silvio Peruzzo, an economist at Nomura Holdings Inc. in London. "It's no longer a periphery versus core issue, now that we see core countries like France struggling too, while Germany goes on its own path."