BEIJING, Feb. 15 -- European economic expansion cooled in the fourth quarter, as a United States-led global slowdown curbed export demand and soaring food and energy costs undermined consumer spending.

    Gross domestic product rose 0.4 percent from the third quarter, the European Union's statistics office in Luxembourg said yesterday.

    The slowdown in Europe's expansion was expected to intensify this year as the US economy hovered near a recession.

    While the European Central Bank has held off cutting interest rates as inflation accelerated to a 14-year high, it said the risks to economic growth were "unusually high."

    "The modestly better-than-expected GDP growth performance is likely to heighten the ECB's reluctance to cut interest rates in the near term, particularly given current inflation dangers," Howard Archer, chief European economist at Global Insight in London, told Bloomberg News. "Nevertheless, we expect a further marked slowing in euro-zone growth during the first half of 2008 to dilute the ECB's concerns over medium-term inflation risks."

    As the US economy cools, the Federal Reserve has slashed interest rates.

    While the ECB has yet to follow suit, policy makers have acknowledged there are downside risks to growth.

    ECB council member Guy Quaden said the slowdown in the US economy would be "more pronounced" than anticipated, suggesting the ECB may revise its growth forecasts made in December.

    The International Monetary Fund on January 29 cut its forecast for global growth this year to 4.1 percent.

    It also lowered its US and euro-area estimates.

    Still, the IMF said it expects emerging markets to weather the deterioration in advanced economies.

    (Source: Shanghai Daily)