By Robin Emmott

(Reuters) – EU leaders meet for an informal summit in Brussels on Wednesday where France aims to push a proposal for metalizing European debt, but the heart of discussions will focus on ways to reignite economic growth across the continent.

Below are three of the main ideas being considered that could form the basis of a “growth pact” to compliment a fiscal treaty that aims to enforce stricter debt and deficit rules in the euro zone from January next year:

EU PROJECT BONDS

Under a proposal by the European Commission, the European Union would back debt issued by the managers of infrastructure projects as a way of attracting investors to finance cross-border transport, energy and communication projects.

The Commission aims to launch a pilot phase to run over this year and next, using 230 million euros ($294 million) from the EU’s budget as collateral and combining that with guarantees from the European Investment Bank (EIB).

The Commission says that by combining the project bonds with guarantees from the EIB, the 230 million euros could be multiplied by three. If other lenders chipped into projects, the amount of money raised could reach 4.6 billion euros.

BRUSSELS, May 16 (Reuters) – Costlier fuel and clothing kept euro zone inflation well above the European Central Bank’s target in April, giving policymakers little room to stimulate growth even though Germany has signalled it may tolerate higher prices at home.

Consumer price inflation in the 17 countries sharing the euro was 2.6 percent in April, the EU’s statistics agency Eurostat said on Wednesday, down from 2.7 percent in March but still stubbornly high given Europe’s drift towards recession.

Inflation remains at February’s level since dropping from a three-year high of 3 percent late last year, with the cost of living ticking up even in depressed economies such as Spain and Italy as oil prices remained close to all-time highs in April.

“Inflation should decrease moderately this year, but a lot depends on the evolution of oil prices,” said Clemente De Lucia, a senior economist at BNP Paribas in Paris.

Consumer prices rose 0.5 percent in April from March, as economists polled by Reuters had expected, driven by oil.

Energy prices jumped 1.1 percent on the month and clothes prices were 2.3 percent higher. There was no change in the cost of food and the cost of education and communications fell.

Brent crude slipped to $110.85 a barrel on Wednesday as deep uncertainty surrounding new Greek elections clouded the economic outlook in Europe, but were still around $120 for much of April.

BRUSSELS, May 16 (Reuters) – Costlier fuel and clothing kept euro zone inflation well above the European Central Bank’s target in April, giving policymakers little room to stimulate growth even as Germany signals it may be ready to tolerate more price rises at home.

Consumer price inflation in the 17 countries sharing the euro was 2.6 percent in April, the EU’s statistics agency Eurostat said on Wednesday, down from 2.7 percent in March but still stubbornly high given Europe’s economic slump.

The downturn was highlighted by no change in the level of unadjusted imports to the euro zone, Eurostat said in a separate release on Wednesday, while exports grew 4 percent year-on-year.

Moreover, adjusted imports shrank 1.1 percent month-on-month in March and exports declined 0.9 percent, underlining the deceleration in the economy.

Despite the lower economic activity, consumer prices rose 0.5 percent in April from March, as expected by economists polled by Reuters, driven mainly by rising prices of clothes and energy.

Energy prices jumped 1.1 percent on the month and clothes prices were 2.3 percent higher. There was no change in the cost of food and prices of education and communications fell.

Brent crude slipped to $110.85 a barrel on Wednesday as deep uncertainty surrounding new Greek elections clouded the outlook for economic growth, but remained close to all-time highs around $120 in April .

BRUSSELS/BERLIN, May 15 (Reuters) – Germany pulled the euro zone’s economy back from the brink of recession at the start of 2012 but stagnation in France and contraction in southern Europe underlined sharply differing fortunes in a bloc labouring under the effects of austerity.

Overall gross domestic product was unchanged in the first quarter following a dip at the end of last year, data showed on Tuesday, meaning that the euro zone missed slipping officially into recession by the narrowest possible margin.

But a surprisingly strong showing from Germany, whose exporters are helping it to cope with the euro zone crisis, flattered dismal performances in most of the other major economies.

“Germany is leading the bloc, but this doesn’t mean we will have a strong rebound. Austerity is not going away and southern European economies are really struggling,” said Mads Koefoed, a senior economist at Saxo Bank. “We are looking at stagnation to very mild growth in the year to come.”

Most euro zone governments are imposing austerity policies, often at great cost to their electorates and the chances of economic growth, hoping to counter the debt crisis by cutting their budget deficits. However, new French President Francois Hollande is heading to Berlin on Tuesday to argue for adding measures to boost growth to the formula.

Tuesday’s data showed a two-speed euro zone, with Italy’s recession deeper than feared and Greece suffering something akin to a depression.

“There’s a growing divergence in the euro zone, with particularly sharp contractions in the peripheral countries that need to do the most structural reforms, while Germany is the outperformer,” said Joost Beaumont at ABN Amro in Amsterdam.

BRUSSELS (Reuters) – The euro zone just avoided recession in early 2012 but the region’s debt crisis sapped the life out of the French and Italian economies and widened a split with paymaster Germany.

Euro zone gross domestic product stagnated in the first quarter, the EU’s statistics office Eurostat said on Tuesday.

That was a touch better than forecast by economists, who had expected a 0.2 percent slump, and dodging a technical recession following a 0.3 percent contraction in the last three months of 2011.

A surprisingly strong 0.5 percent expansion by Germany, Europe’s biggest economy, appeared to save the bloc from recession, even as the French economy stalled and Italy reported weaker-than-expected output that epitomized southern Europe’s anaemic economies.

“Germany is leading the bloc, but this doesn’t mean we will have a strong rebound, austerity is not going away and southern European economies are really struggling,” said Mads Koefoed, a senior economist at Saxo Bank. “We are looking at stagnation to very mild growth in the year to come,” he said.

Barely out of the 2009 financial crisis, businesses and households in much of Europe are hampered anew as governments cut back on spending to curtail budget deficits and companies freeze plans to invest.

Despite two summits this year and another planned for next week, EU leaders have been unable to find a way back to growth, while many southern Europeans are turning against austerity measures, holding huge street protests in Madrid and backing radical political parties in Greece’s recent elections.

BRUSSELS (Reuters) – The euro zone’s sick economy probably slipped into its second recession in just three years in early 2012, data is due to show on Tuesday, as the debt crisis sucks southern Europe into a downward spiral and widens the split with paymaster Germany.

Euro zone gross domestic product is seen contracting 0.2 percent in the first quarter, according to economists polled by Reuters, following a 0.3 percent contraction in the last three months of 2011 and driving it into a recession.

Barely out of the 2009 global financial crisis, businesses and households are engulfed anew as governments cut back on spending to curtail budget deficits and companies freeze plans to invest, unable to find a way back to economic growth.

Optimism at the start of the year that the euro zone would escape a downturn has been crushed by unexpected contractions in manufacturing, consumer confidence and business morale, while one in 10 of every worker in the euro zone is out of a job.

“The euro zone economy is heading into recession and is not likely to recover any time soon,” said Jurgen Michels, an economist at Citigroup in London.

“This definitely won’t be that mild and will probably last much longer than policymakers expected,” he said.

Germany, the largest economy in the 17-nation bloc, is among the few countries likely to escape the malaise by growing 0.1 percent in the first three months of this year, while France’s economic output will likely remain unchanged in the quarter.

BRUSSELS, May 14 (Reuters) – Isolated in Europe, Britain has little choice but to back down on its demand for changes to draft EU banking rules it had called idiotic.

European Union finance ministers meeting on Tuesday will seek to agree rules on the capital that banks across the 27-member bloc must raise in order to cover their risks, a measure designed to avoid another financial crisis.

Britain wants the freedom to impose higher standards on banks and fears the loss of control over its financial sector. Other countries, such as France, had argued for a single standard across Europe.

“Britain is now left standing alone and its reluctance to compromise has only served to strengthen the resolve of others to accept this deal,” said one EU diplomat.

Despite being unable to win all the concessions it wants, there are signs Britain is ready to back down, according to another diplomat familiar with Britain’s position.

Struggling with the cost of bailing out banks that foundered early in the financial crisis, Britain wants higher capital limits to avoid any future tax-payer funded bank rescues. It is also wary of others setting the rules for Europe’s biggest financial centre.

Some countries want to avoid burdening banks, weakened by the eurozone debt crisis. The European Commission, the EU executive, fears that if banks in some countries are told to raise more capital, that will reduce badly needed lending to neighbouring states.

BRUSSELS, May 14 (Reuters) – Output at factories in the euro zone unexpectedly fell in March, the latest in a series of disappointing numbers signalling that the bloc’s recession may not be as mild as policymakers hope.

Industrial production in the 17 countries sharing the euro fell 0.3 percent in March from February, the EU’s statistics office Eurostat said on Monday. Economists polled by Reuters had expected a 0.4 percent increase in the month.

The figures stood in contrast with German data last week showing output in the euro zone’s largest economy up 2.8 percent for the month, underlying the division in the bloc.

Many economists expect Eurostat to show on Tuesday that the euro zone entered its second recession in just three years at the end of March, with households suffering the effects of austerity programmes aimed at cutting debt and deficits.

“Industrial production is a timely reminder that first-quarter GDP will likely show a contraction,” said Martin van Vliet, an economist at ING. “With the fiscal squeeze unlikely to ease soon and the debt crisis flaring up again, any upturn in industrial activity later this year will likely be modest.”

European officials have repeatedly said the slump will be mild, with a recovery in the second half of this year. But the strong economic data seen in January has unexpectedly faded and business surveys point to a deeper downturn, with the drag coming from a debt-laden south, epitomized by Greece, Spain and Italy.

Economists polled by Reuters last week estimated the euro zone economy shrank 0.2 percent in the first quarter, after shrinking 0.3 percent in the fourth quarter of last year.