Europe's prospects brighten as U.S. fades

Whatever the explanation and despite the divergence, there are signs that both regions will cool down in the second half of the year.

The U.S. "economy entered the second quarter with plenty of momentum but exited with very little," said IHS Global Insight economist Brian Bethune.

Economists polled by Reuters think U.S. growth slowed to a 2.5 percent annual rate in the second quarter, down from 2.7 percent in the first quarter and 5.6 percent in the final quarter of last year.

Britain's second-quarter growth was closer to 4.4 percent at an annualized rate.

Dig beneath the headline and the contrast between the United States and Britain looks even sharper. Nearly all the growth in the British economy came from the private sector, led by construction and services.

Friday's U.S. GDP report is likely to show a hefty contribution from government spending and a slowdown in consumer spending.

The Commerce Department will also release its annual revisions to the national accounts back to 2007, and Bethune's firm thinks the tweaks will show the recession was even deeper than thought, leaving a bigger hole to fill.

The same day Britain released its robust growth reading, the Ifo economic think tank reported German business sentiment jumped by a record margin in July to reach its highest level in three years. German consumer sentiment figures are due on Tuesday, and are expected to hold steady.

In contrast, U.S. consumer confidence fell sharply in July.

Read more on Reuters.com...