Germany, France return to growth

GERMANY’S biggest increase in exports in almost three years and a recovery in French consumer spending helped the two largest of the dozen euro economies return to growth in the third quarter, government reports showed.

A 3.2% gain in German exports offset a 0.6% drop in consumer spending, helping the economy expand 0.2% from the previous quarter.

France grew twice as fast, as a 0.4% increase in consumer spending added to a 1.1% gain in exports. Germany’s reliance on exports, equivalent to a third of gross domestic product, raises concern about the growth outlook after the euro rose to a record high this week, making European goods more expensive for customers abroad and eroding US revenue for exporters. “The most worrying aspect of these reports is that, because the recovery has been export-led, it could be snuffed out by the strength of the euro,” said Martin Essex, an economist at Capital Economics Ltd. in London.

Siemens AG cChief eExecutive Heinrich von Pierer said last week sales to the US, China and India should boost growth at Germany’s largest electronics company.

Henkel , the maker of Schwarzkopf hair products and Duck tape, this week reduced its sales forecast as demand slows in Germany and the euro’s gain makes revenue generated in the US currency less valuable.

The euro rose 0.4% to $1.1921 as of 12.28pm in Frankfurt, close to the record $1.1978 reached on Wednesday. The European currency has gained almost a fifth over the past year. So far, stronger growth abroad has more than offset the euro’s appreciation.