Market News

FRANKFURT (Reuters) - Euro zone industrial output rose more than expected in February, raising hopes that the sector bottomed out after a two-year recession, even if U.S. trade policy keeps risks high, data from Eurostat showed on Tuesday.

Output in the 20 nations sharing the euro rose by 1.1% on the month, outpacing the 0.3% expected in a Reuters poll of economists, as demand for non-durable consumer goods surged.

Compared to the same month a year earlier, output was up by 1.2%, well ahead of expectations for a 0.8% decline, but production remained well below its late 2022 levels, when the industrial recession started.

Output suffered as Russia's war in Ukraine pushed crucial energy costs to record highs and cheaper competition, mostly from Asia, crowded out European products. The car sector also took a particular hit as the popularity of its product range declined.

Among the euro zone's biggest economies, Germany continued to experience declining output but France and Spain both recorded increases.

However, U.S. tariffs, if proven lasting, are likely to cut output once again as demand from other regions and higher spending at home are unlikely to compensate for lost sales in the near term, economists argue.

(Reporting by Balazs Koranyi; Editing by Tomasz Janowski)