ECB leaves lending rates unchanged

FRANKFURT, Germany, June 4 (UPI) -- The Governing Council of the European Central Bank on Thursday opted to continue with a bank-to-bank lending rate of 1 percent.

In a prepared statement, bank President Jean-Claude Trichet said, "economic activity weakened considerably in the first quarter of 2009."

Eurostat's initial estimate of the euro area's gross domestic product showed a 2.5 percent contraction following a decline of 1.8 percent in the fourth quarter, Trichet said.

He said economic growth was expected by "mid-2010," following "a stabilization phase."

Trichet said policy makers considered economic risks "balanced."

"On the positive side," he said, the economy of the euro area could see "stronger than anticipated effects" of stimulus spending and improved confidence.

"On the other hand," he said, "concerns remain relating to ... a stronger impact on the real economy from the turmoil in financial markets (and) more unfavorable developments in labor markets."