European Union recovery broadening, risks remain: EU document

European Union recovery in the second quarter broadened and the outlook for inflation remains moderate, a paper prepared for the bloc's finance ministers said.

Exports lay behind the rebound but risks remained from emerging and sovereign debt markets, said the paper which examined the economy since April this year.

"This nevertheless again conceals high divergences across member states. Inflation rates in the EU are set to remain moderate," the paper said.

Also "some concerns are related to the risk of overheating in emerging markets".

Finance ministers meeting in Brussels on Thursday and Friday will also be told that bank earnings have bounced back but this may not last.

"In the longer-term the sustainability of banks' earnings is not ensured as the previous increase in profits was mainly caused by the reduced impairment on loans and banks' provisioning," it said.

Furthermore, the "present outlook suggests that, for many banks, the conditions for exit from the support measures are not favourable and exits should be carefully assessed."

The paper also recommends that this summer's EU-organised stress tests of banks should be repeated annually.