LONDON: Europe crawled out of recession in the third quarter with the 16-nation eurozone posting 0.4 percent growth, official data confirmed on Thursday.

While keeping with its initial GDP estimate for the eurozone, the EU's Eurostat data agency tweaked upwards the official growth rate for the 27-nation EU as a whole to 0.3 percent from an earlier estimate of 0.2 percent.

While the world's biggest trading bloc thus joined Japan and the United States in returning to growth, the situation remained fragile.

"We suspect that the eurozone's recovery could well lose momentum for a time in 2010 before growth starts to gradually pick up again," cautioned Howard Archer, chief economist for the IHS Global Insight forecasting group.

"This loss of momentum is expected to be the consequence of the withdrawal of some stimulus measures, including car scrappage schemes and employment support measures," he explained, estimating that eurozone GDP growth will be limited to around 1.0 percent next year.

Underlining the fragility, eurozone retail sales were stable in October, narrowly ending a downward trend, but still significantly down on a year ago.

Unsurprisingly, seasonally there was a sizeable GDP contraction on a 12-month basis, down 4.1 percent in the eurozone and 4.3 percent in the EU, though these figures too were better than the equivalent results in the second quarter.

The return to growth followed five quarters of contraction as Europe and the rest of the world was buffeted by the financial and economic crises.

Leading the field in Europe's return to growth was Germany, where GDP expanded for a second successive quarter and at an increased rate of 0.7 percent quarter-on-quarter.

France also expanded for a second successive quarter, while not accelerating, and Italy and the Netherlands returned to growth.

The Spanish economy spoilt the party by continuing to contract, as did that of non-eurozone Britain.

Where there was growth, or at least moderated falls, this was at least in part to fiscal stimulus measures and improved global trade, analysts said.

Private sector business activity across the eurozone also showed further signs of recovery, growing at the fastest rate for two years in December, according to a well-watched survey.

But here too data and research group Markit, which carried out the survey, said markets conditions were "clearly fragile and we may be nearing the growth peak."

The purchasing managers' index (PMI) for the 16 eurozone nations rose to 53.7 points from 53.0 points in October.

The latest figures were well above the boom-bust line of 50 points -- a score below 50 indicating a contraction -- but sustained job haemorrhaging was highlighted.

Eurozone unemployment stood at 9.8 percent in October, the highest level seen since 1998, placing a substantial drag on recovery.