The slide in second-quarter growth in the 17-member eurozone to a meagre 0.2 per cent from 0.8 per cent in the first three months of the year also served to trigger another sell off in European shares and to drive the euro down by 0.6 per cent to below 1.44 dollars.
The decline in gross domestic product (GDP) was even more pronounced in Germany. The eurozone's biggest economy almost ground to a standstill in the second quarter after expanding by 1.3 per cent in the first three months of the year.
The ECB's benchmark refinancing rate now stands at 1.50 per cent, after it raised rates twice this year.
However, in the light of the ongoing market uncertainty and weak economic growth numbers, a growing number of economists now believe that the Frankfurt-based bank will be forced to back away from any plans for further hikes in borrowing costs this year.
Up until recently, many analysts had expected the ECB would deliver another 25 basis points increase in eurozone borrowing costs possibly in October in a bid to curb inflationary pressures stirred up by the surge in energy prices earlier this year.
But said Jennifer McKeown, senior European economist with the research group Capital Economics: 'With activity barely expanding throughout the euro-zone, at least any lingering urge for the ECB to raise interest rates further should have been well and truly eradicated.'
The most immediate impact of the decline in eurozone and German growth was on Europe's already jittery share markets.
The Frankfurt stock market led European bourses deep into the red by tumbling about 2.5 per cent as the scale of the economic slowdown across the eurozone emerged.
By afternoon trading the eurozone's blue chip Eurostoxx 50 had been hammered down by 1.8 per cent by anxious investors as share markets across the currency bloc eradicated the gains made on Monday after a fortnight of extreme volatility.
Coming after data showing growth grew by just 0.3 per cent in the US economy and slumped by 0.3 per cent, Tuesday's European growth data helped to renew market fears about the global economic outlook.
But the real risk is that the growth worries and market turmoil facing the eurozone could prove to be self-fulfilling and undercut not just economic sentiment in the region but investment and hiring as well.
The ECB has been at the forefront of moves to shore up investment confidence in the eurozone splurging 22 billion euros (32 billion dollars) last week on buying up government bonds from debt-strapped nations.
This came in the wake of fears that Italy and Spain could fall victim to the debt crisis, that has now rolled on for about 20 months.
But sharply lower growth in the so-called core eurozone states such as Germany and France is likely to compound the problems facing the currency bloc's debt-strapped states such as Portugal, Greece and Ireland.
Even before Tuesday's data, debt-hit members of the eurozone have been struggling to draw down high debt levels and to knock their state finances into shape as the region's economy lost momentum in recent months.
The ECB's more aggressive monetary stance also stands in contrast in other leading central banks.
Responding to the current bleak world economic environment, the Bank of England announced this month that it had left rates on hold at an historic low of 0.5 per cent for the 29th consecutive month.
In the meantime, the US Federal Reserve signalled last week that it plans to keep rates on hold at near zero for the next two years.
Slowing growth, however, is also likely to help undercut inflationary pressures in the eurozone.
Annual inflation in the currency bloc posted a surprise fall to 2.5 per cent in July from 2.7 per cent in June.
This left eurozone inflation remains above the ECB's target limit of 2 per cent. Nevertheless, falling consumer prices might give the fiercely anti-inflationary ECB some room to move in stepping back from further rises in the cost of money.
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