* Eurostat data confirm modest growth in first quarter
* Stronger expansion in second quarter may be short-lived
(Updates with analysts' comments, details)
By Marcin Grajewski
BRUSSELS, July 7 (Reuters) - Euro zone economic growth in the first three months of 2010 was confirmed on Wednesday at 0.2 percent quarter-on-quarter, and 0.6 percent on the year, but any stronger expansion in the second quarter could be short-lived.
European Union statistics office Eurostat said in its second estimate for the first quarter that inventories had helped the 16-country euro area's economy grow modestly over the period despite negative net trade, investment and consumer demand.
Inventories contributed 1.0 percentage point to overall quarterly growth, more than the 0.8 percent reported previously.
Government spending made a neutral contribution and exports added 0.9 percentage point, slightly less than previously thought.
Imports, however, subtracted 1.3 percentage points. Falling investment and household demand took away 0.2 percentage point and 0.1 point respectively, it said.
"The breakdown of first-quarter euro zone GDP on the expenditure side did not make attractive reading. Growth was driven by inventories while consumer spending disappointingly contracted anew and investment saw further marked contraction," said Howard Archer, chief European economist at IHS Insight.
Many economists expect euro zone growth to accelerate to 0.4-0.5 percent quarter-on-quarter in the April-June period, but expansion could later falter because of austerity measures ordered by many governments to avoid a sovereign debt crisis.
Persistently high unemployment -- which at 10 percent in May was close to a 12-year high -- is likely to keep a lid on consumer demand, which is key to economic growth.
"The Eurozone still faces significant obstacles to robust growth, and we suspect that growth will moderate anew in the second half of the year after the likely spike up in the second quarter," said Archer.
In the first quarter, the euro zone's two largest economies -- France and Germany -- expanded by 0.1 percent and 0.2 percent respectively from the previous three-month period.
Greece, hit by a debt crisis, contracted more than previously thought -- by 1.0 percent, compared with the previous reading of 0.8 percent. Italy grew by 0.4 percent, rather than 0.5 percent as reported by Eurostat in early June.
Poor growth prospects are likely to have cemented expectations that the European Central Bank will keep its main interest rate at 1.0 percent far into 2011.
The European Commission, the EU executive, expects the euro zone to reach full-year growth of 0.9 percent in 2010, compared with a 2.1 percent contraction in 2009. (Editing by Dale Hudson and Timothy Heritage)