European Union (EU) finance ministers warned on Tuesday that soaring oil prices are set to pull Europe's economic growth even lower than previously expected.

Their prediction that the EU economy will expand by 1.3 percent in 2005 is more gloomy than both their previous prediction and that of the EU executive European Commission.

The 50 percent rise in oil prices since the start of the year was largely responsible, the ministers said in a statement.

They also gave Italy more time to meet EU rules on its budget deficit.

Italy now has till the end of 2007 to bring the shortfall down to less than 3 percent of gross domestic product, from its current 4.3 percent.

Italy is the third of the EU's biggest economies to fall foul of the 3 percent rule, enshrined in the EU's Stability and Growth Pact.

France and Germany have spent the past few years above that level, and their failure was one reason for the decision taken earlier this year to relax the rules.

Today's meeting of finance ministers is the first with UK Chancellor Gordon Brown in the chair, the UK having taken over the rotating presidency of the EU on July 1.

Source: Xinhua