Italy fell into recession in the third quarter, with the economy contracting 0.5 percent from the second quarter when it shrank 0.3 percent, official figures showed on Friday.

The preliminary estimate was much steeper than expected for the eurozone's third largest economy and comes the day after official figures showed Germany's economy shrinking for the first time in five years.

The recession is the first in Italy in four years and the contraction of 0.5 percent is the deepest in 10 years, according to the national statistical agency ISTAT, which is to confirm the figures on December 10.

The figures reflect across-the-board performance, notably a "lower value added in agriculture, industry and services," ISTAT said.

Italy's last recession was in the fourth quarter of 2004 and the first quarter of 2005, with contractions of 0.2 percent and 0.1 percent respectively.

A Dow Jones Newswires consensus had forecast a 0.2 percent contraction for July to September 2008.

Third-quarter performance was down 0.9 percent compared with the same period of 2007, against a forecast of 0.3 percent.

The government in September -- before the full extent of the world financial crisis became apparent -- officially forecast growth of 0.1 percent this year and 0.5 percent in 2009.

The International Monetary Fund was much more pessimistic, predicting that GDP would shrink 0.2 percent in 2008 and 0.6 percent next year.

The European Union, for its part, has forecast zero growth for both years.

Germany, the eurozone's biggest economy, entered recession in the third quarter for the first time in five years, according to official figures announced on Thursday.

Recession fears in Italy deepened on Monday with figures showing industrial output had slumped 2.1 percent in September from August, the biggest single-month drop since December 1998.

It was 5.7 percent less than a year earlier and down 2.3 percent for the first nine months of 2008, ISTAT said.