(BRUSSELS) - Eurozone industrial production fell by 0.3 percent in July, data from the EU statistics office Eurostat showed on Friday, providing more evidence that the bloc is teetering on the edge of a recession.

The July figures marked a third successive decline and on a 12-month basis industrial output fell by 1.7 percent in the 15-nation eurozone.

Economists had expected the measure to slip 0.3 percent on the month but just 0.6 percent on the year, according to Dow Jones Newswires.

The news came as EU finance chiefs, meeting in southern France, struggled to map out a strategy to avert recession in Europe, as Berlin rejected the idea of a sweeping European stimulus package to revive the flagging economy.

The European Commission estimated on Wednesday that Europe was teetering on the brink of a technical recession, which economists define as two consecutive quarters of contraction.

After the 15-nation eurozone economy contracted 0.2 percent in the second quarter, the European Union's executive arm estimated that it would be at a standstill in the third quarter.

The commission cut its eurozone growth estimate for the whole of 2008 to 1.3 percent from a forecast of 1.7 percent given in April, marking an even sharper slowdown from the solid 2.6 percent growth recorded last year.

After the eurozone economy contracted 0.2 percent in the second quarter, the commission predicted it would stall in the third quarter and expand only 0.1 percent in the final three months.

For the 27 EU nations as a whole, Eurostat also put industrial production for July at 0.3 percent down, with the 12-month decline at 1.3 percent.

The weakness in production was practically across the board in July, with only the energy sector, still buoyant from the high oil prices, achieving a month-on-month increase.

"While the recent retreat in the euro and oil prices will obviously benefit eurozone manufacturers, we believe that they will continue to find life difficult over the coming months as they are buffeted by slowing domestic demand, muted activity in key export markets and tight lending conditions," said Howard Archer, chief European economist at London-based Global Insight.

"Furthermore, oil prices are still relatively elevated as is the euro," he added.

In separate figures, Eurostat showed that eurozone and EU employment was up by 0.2 percent in the second quarter after a 0.3 percent hike in the first quarter.

That means an estimated total of 226.4 million people are employed throughout the European Union.

Those figures add to "the mounting evidence that markedly weaker eurozone economic activity and depressed business confidence is taking an increasing toll on labour markets," said Archer.

The eurozone purchasing managers' surveys indicate that employment contracted in both manufacturing and the services sector for a second successive month in August, he added.

Industrial production - July 2008 compared with June 2008 - Eurostat

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