FRANKFURT (AFX) - The Bundesbank said according to preliminary figures German GDP contracted by around 0.25 pct in the fourth quarter last year from the third quarter and stagnated from the fourth quarter last year. "The economic weakness of the German economy continued in the final months of last year," the Bundesbank said in its February monthly bulletin. Industry, the construction sector and private consumption were all very weak in the fourth quarter, it added. For the full year 2001, the Bundesbank said the ecomomy grew by 0.5 pct from the year earlier. This is slightly worse than the 0.6 pct provisional figure supplied by the statistics office. But the Bundesbank said a range of indicators in recent months have indicated there was a stabilisation in the German economy at the end of last year and at the start of 2002. "The probability that the economic situation will worsen again is at the moment small," the Bundesbank said. Surveys have shown an improvement in manufacturing confidence, while leading indicators show there are no longer so many risks to the performance of the economy, it said. But the Bundesbank went on to warn that a sharp rise in wages, as demanded by several of Germany's most powerful unions, "would significantly hinder the chances of an economic recovery." The Bundesbank also sounded an upbeat note on the world economy, after a better than expected performance by the US. "There are signs of a gradual stabilisation in the global economic situation," it said.