PARIS, Dec 14: Industrial production fell across most of the euro zone in October as firms trimmed output and froze investment to deal with a global economic slowdown that threatens to sharply dent the area’s growth going into 2002.

Economists said industrial output figures for France, Italy and Finland published on Friday showed the sharp slowdown in Germany, which published output data last week, was now spreading to previously sturdier economies.

France’s industrial output, excluding construction, fell by a higher-than-expected 0.6 per cent in October, statistics institute INSEE said, raising the prospect that the euro zone’s top performing economy will shrink in the fourth quarter.

“France is no longer the best performer in the euro zone and today’s figures might lead to a revision of economic forecasts,” said David Naude, economist at Deutsche Bank.

A survey by the Bank of France of more than 10,000 industry chiefs in November prompted a downward revision of economic growth in the fourth quarter to 0.2 per cent and a forecast that growth in the first quarter of 2002 will ease to 0.1 per cent.

Italian industrial production fell 0.2 per cent in October, its biggest fall in at least three years, also further than economists had expected, figures from ISTAT showed.

“October’s data suggests we probably won’t see a turning point for several months,” said Lorenzo Codogno, economist at Bank of America, about the drop in Italy.

In Finland, industrial output was down 6.2 per cent in October on an annualised basis, sapped by a sharp drop in pulp and paper production.

However, Belgium bucked the trend, reporting industrial output was up 0.2 per cent year-on-year.

The data chimed with previously published industrial output data from Germany, the Netherlands and Spain which showed firms were either cutting output or scaling down expansion plans.

Industrial output in Germany, the largest economy in the 12-nation euro zone, showed a 2.1 per cent fall in October for an annual contraction of 4.0pc.

French steelmaker Usinor, a big supplier to the automobile industry, earlier this month posted a third-quarter loss and said it saw no let-up in the poor industrial environment in the fourth quarter.

Italian industry has also been hard hit, with carmaker and industrial group Fiat, Italy’s biggest manufacturer, announcing this week it was shedding 6,000 jobs at its plants outside the country.

Economists have so far seen the slowdown in Germany, which is heavily dependent on foreign demand for its export goods, as evidence of a two-speed euro zone.

Germany’s leading Ifo Economics Institute says Germany is already in recession and forecasts growth of just 0.7 per cent this year and 1.3 per cent in 2002.—Reuters