Madrid, Aug 7 (IANS/EFE): Spain's economy grew 0.2 percent in the second quarter, down from a 0.3 percent pace in the first three months of the year, the central bank said.

An expansion in exports was outweighed by a sharp decline in domestic demand, according to the latest figures from the Banco de Espana.

Weak investment in construction and a drop in government spending also contributed to the disappointing second-quarter numbers, the bank said.

The economy grew 0.7 percent in April-June compared with the same period last year, when household purchases surged ahead of a July 2010 increase in value added tax.

Intensifying market pressure on Spanish sovereign debt is another negative factor, the central bank said, calling for "decisive and clear" action at the level of the European Union to make good on commitments to backstop member-states and the euro.

Job destruction continued in the second quarter, though at a slower interannual rate, 1.2 percent.

With unemployment above 20 percent and household incomes still on the decline, it appears likely that consumer spending will continue to show "a notable lethargy", the Banco de Espana said.

Business investment in capital goods climbed between the first and second quarters, but fell in comparison with April-June 2010, the bank said.

Spain has struggled to overcome the double impact of the global recession and the bursting of an extended real estate bubble.