The euro zone's economic recovery lost steam in the final quarter of last year as gross domestic product barely expanded, with France the only one of the currency area's four biggest economies to post growth.
The 16-country area's GDP edged up 0.1 per cent in the October-December period compared with the previous quarter, and contracted by 2.1 per cent from the last quarter of 2008, European Union data office Eurostat said in a flash estimate.
Analysts polled by Reuters had expected quarterly growth of 0.3 per cent and a year-on-year decline of 1.9 per cent.
Over the full year 2009, euro zone GDP fell 4.0 per cent.
"It is disappointing - only a few countries delivered, mainly France," said Juergen Michels, economist at Citigroup.
The bleak figures could help deter the European Central Bank from raising interest rates and press governments to maintain fiscal stimulus programs that bolster their economies.
The euro zone figure was dragged down by Germany, the area's biggest economy, which registered quarter-on-quarter stagnation.
In France, the zone's second-biggest economy, GDP grew by a better-than-expected 0.6 per cent on the back of robust consumer spending. The other largest economies, Italy and Spain, contracted by 0.2 and 0.1 per cent respectively.
Recession continued in Ireland, Greece and Cyprus, while Portugal stagnated. Austria and the Netherlands expanded.
By comparison, the United States economy grew by 1.4 per cent quarter-on-quarter in the same period and by 0.1 per cent in yearly terms.
In the third quarter, the euro zone economy expanded by 0.4 per cent quarter-on-quarter.
An uncertain growth outlook is expected to keep the European Central Bank's main interest rate at a record low of 1.0 per cent until at least the fourth quarter of 2010, economists say.
But the bank has already started to pull back its emergency lending measures introduced during the financial crisis.
"The likely fragility of the recovery means that both governments and the ECB need to be wary about withdrawing stimulus measures too soon or too aggressively," said Howard Archer, chief European economist at IHS Global insight.
"This underpins our view that the ECB will keep interest rates down at 1.0 per cent until at least late 2010 and the bank could very well delay lifting them until 2011," he added.
Analysts say any recovery from the biggest economic crisis since World War Two is likely to be limited as growing unemployment forces consumers to rein in spending.
The euro zone's jobless rate rose to 10 per cent of the work force in December, its highest since August 1998.
"It seems likely consumer and fixed investment spending continued to contract, while this was offset by positive contributions from net exports, inventories and government consumption," said Nick Kounis, economist at Fortis.
"Recovery in the euro zone is continuing, but at a snail's pace," he added.
While GDP growth depends largely on government spending as tens of billions of euros are pumped into the economy, bond investors are growing increasingly nervous over deteriorating public finances in many countries.
Financial problems in Greece have sparked talk about a bailout for the country and raised doubts about stability in the currency area.
Industrial production figures compounded the gloomy picture.
Eurostat said euro zone production tumbled 1.7 per cent in December from the previous month, defying expectations of growth, and sank 5.0 per cent annually.
It was the biggest monthly decline since February 2009, when production nose-dived 3.8 per cent.
Some analysts cautioned that bad weather had played a role in December's poor performance.