Strong figures from Germany on Wednesday and a surprisingly robust performance in France signal an end to a record 18-month recession which has cost millions of jobs and tested the eurozone to the limit. Germany, Europe's powerhouse economy, grew 0.7 percent in the three months to June, at the very top of analyst estimates, while France, for so long in the doldrums, expanded 0.5 percent, way ahead of forecasts for just 0.2 percent. With the new data, analysts were quickly recasting their sums ahead of the 0900 GMT eurozone second quarter report, pencilling in a gain of up to 0.3 percent, instead of the previous 0.2 percent. The French figures were the best since first quarter 2011 and were particularly significant given how the eurozone's second-ranked economy has struggled for momentum, burdened with heavy debt and an increasingly uncompetitive export sector. Domestic consumption provided the main impetus for a report warmly welcomed by the government. The outcome "confirms the end of the recession in the French economy," said French Finance Minister Pierre Moscovici. "It amplifies the encouraging signs of recovery." The official INSEE statistics bureau said it was upgrading its 2013 French forecasts to growth of 0.1 percent, from a contraction of 0.1 percent. Analysts were upbeat on the latest data but also maintained a note of caution -- the 17-nation eurozone may be returning to growth but its performance is anaemic compared with other major economies and the problems of the debt crisis refuse to go away. Jonathan Loynes of Capital Economics said the early reports "confirm that the eurozone economy emerged from its six-quarter recession," with the 0900 GMT report set to show "a quarterly gain ... of 0.3 percent, a bit above the median forecast of 0.2 percent." Germany's gain of 0.7 percent was slightly stronger than expected and France surprised but Loynes also noted that the Netherlands fell 0.2 percent while Spain and Italy continued weak. The "indebted countries of the periphery are still mainly in recession and a very long way from the rates of expansion needed even to begin to eat into their enormous debt burdens," he cautioned. "The eurozone's recession may be over -- for now at least -- but the debt crisis in the periphery is decidedly not," he said. Berenberg Bank economist Christian Schulz was equally guarded. "The eurozone's two heavy-weights bounced back with substantial growth in the second quarter," Schulz said. "Their growth, in combination with the much milder recession in the crisis countries, has dragged the eurozone out of recession since Easter." In both Germany and France, growth was driven by domestic demand, while trade was buoyant but probably broadly neutral for overall growth, he said. But Schulz noted that while investment made a return in Germany, "it remained elusive in France, suggesting that France's bounce-back does not signal a return to persistent strong growth yet." The second-quarter eurozone report comes after a whole series of data signalling a turn in the single currency's fortunes after massive job losses, driven by the slump and the austerity measures governments have adopted to tackle the debt crisis. For some, especially Germany which faces polls in September, the second quarter growth report could thus prove to be some vindication of the spending cuts and tax hikes pushed through as essential for a return to growth.

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