FRANKFURT: Mixed German data highlighted concerns over a potentially fragile recovery in Europe's biggest economy on Tuesday, a picture mirrored across the 27-nation European Union (EU) as a whole.

The good news was that the German trade surplus and exports posted gains in July as global economic activity began to rebound from a historic slump.

The positive German data was slightly offset, however, by news that industrial production dropped 0.9 percent the same month, a result of anticipated holidays in the country, the economy ministry said.

Europe's economic powerhouse is emerging from its worst recession in six decades and while the outlook for 2009 is brighter, it becomes more uncertain next year when government stimulus programmes are set to taper off.

Unemployment will probably rise and German firms could also face a credit crunch that could curtail investment just as demand picks up.

The situation is comparable in Britain and France, the second and third biggest EU economies, while further north in the Baltic states and Finland, the good news dimmed as autumn approached and the days grew shorter.

On a global level, the International Monetary Fund was upbeat meanwhile, with IMF managing director Dominique Strauss-Kahn saying a recovery might take place three months sooner than expected.

"For a year, we've been saying that the recovery might take place in the first half of 2010," he told the Italian newspaper Il Sole 24 Ore.

"Perhaps it will be brought forward by a quarter and that would be good news."

German Chancellor Angela Merkel revised Berlin's economic forecast slightly higher less than three weeks ahead of a general election but the economy was still expected to contract between 5.5-6.0 percent this year, compared with earlier estimates for 6.0 percent.

"It will still be a long time until we get to the place we were in before the crisis," Merkel said in a speech to parliament.

In Britain, manufacturing output rose 0.9 percent in July from June, suggesting it could soon exit recession as well.

The Bank of France revised its third quarter growth forecast higher to 0.3 percent although business leaders said the level of industrial orders remained weak.

Other bright spots were found in Portugal, which said it had pulled out of recession in the second quarter, and the Czech Republic, which did the same.

Unemployment, which lags behind in economic cycles, climbed to 8.5 percent of the Czech workforce however, the highest rate in almost 3.5 years.

Several EU countries had gloomy news, ranging from tumbling industrial production data to dismal data on growth, or rather a lack of it.

Spanish industrial output marked its fifteenth consecutive decline in July on an annual basis, while in Slovakia it dropped for a ninth straight month as the country's car makers remained on the defensive.

Recessions remained entrenched in Estonia, Finland, Hungary, Latvia and Lithuania, with Helsinki the eurozone's weakest performer owing to a 12-month contraction of 9.4 percent in the second quarter.

It was Finland's biggest annual decline since the fourth quarter of 1991.

Finally, gold prices broke above 1,000 dollars an ounce in London, the highest level since March 2008 when they hit a record high of 1,032.70 dollars.

Dealers said sales were fueled by a falling dollar, gold's safe-haven status and the risk of higher inflation.