Germany's economy, Europe's largest, grew a larger-than-expected 0.3 percent in the second quarter from the previous three-month period as consumer spending and strong exports helped stave off effects of Europe's debt crisis, the Federal Statistical Office said Tuesday.

The consensus in the markets was that Germany's economy would grow by only 0.2 percent during the quarter, down from the 0.5 percent recorded in the first three months of the year.

A clearer breakdown of the quarterly performance will not emerge until later this month. However, the statistics office said exports and public consumption combined with lower unemployment to lift growth. One downbeat indicator was a fall in investment in machinery and equipment, a possible sign that firms are getting less confident about the future.

"The economy remains the stronghold of the eurozone _however, another strong quarter merely glosses over the fact that even the stronghold has already caught the euro crisis virus," said Carsten Brzeski, an economist with ING bank in Brussels.

Nevertheless, the better than expected performance news helped boost the euro, which was up 0.2 percent to $1.2357 in morning trading.

The German economy has so far managed to withstand the effects emanating from the debt crisis on its doorstep but many economists are worried it will soon be dragged down as well. With many euro countries in recession, demand for Germany's high-value exports may start to falter.

"Please keep in mind that about 40 percent of all German exports are shipped to eurozone countries," said UniCredit economist Andreas Rees.

The 17-country eurozone a whole is expected to have contracted 0.2 percent in the second quarter _ figures are due out later. However, the better than expected German figures coupled with news that France's economy did not contract during the quarter as had been widely feared, may help the eurozone avoid shrinking during the quarter. A number of euro countries, including Greece, Spain and Italy are already in recession _ officially defined as two consecutive quarters of shrinking output.

The German government is predicting overall growth of 0.7 percent this year, though others, like the International Monetary Fund and Germany's central bank, are forecasting slightly more robust gains.