EU says eurozone economy to shrink in 2012

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The European Commission has predicted that the eurozone economy will contract by 0.3% in 2012.

In its previous forecast in November it said that the economy would grow by 0.5%.

"The unexpected stalling of the recovery in late 2011 is set to extend into the first two quarters of 2012," the Commission said.

But it added that the 17-nation bloc would only have a "mild" recession and that it saw signs of stabilisation.