Europe just can't get out of its own way as it struggles to dig out of its economic woes, but German stocks haven't been slowed by the continent's troubles. Germany's DAX (DAXINDICES:^DAX) stock index continued ticking higher this week, moving up by 1% over the past five days. For the year, the DAX has gained more than 17.6%, with much of the bounce coming over the past few months.

Yet Europe's recovery isn't flying ahead at full steam like the DAX's jump would indicate. Quite the contrary: The EU's barely holding on to slipping back into a recession, even if Germany's domestic economy has eked out growth over the past few years. Will top German companies and stocks suffer for Europe's troubles?

Europe stuck in neutral
While stocks are jumping, Europe's economy can only cling to growth: For the third quarter of the calendar year, the European GDP grew by only 0.1%, according to data released this week. That's down from 0.3% from the prior quarter, and a similar drop would send Europe's economy back into contraction. The European Commission expects Europe to pick up the pace in 2014 with growth of more than 1%, but if its biggest member nations can't get their own economies in line, that mark will be hard to meet.

France, one of Germany's top trade partners, saw its own economy shrink by 0.1% for the quarter. Germany's own economy grew by a mere 0.3%, down from a 0.7% mark in the second quarter. For a German economy predicated on trade -- particularly trade in the eurozone -- it's especially difficult to watch fellow European nations struggling to get anything going. Weak trade prospects in the bloc won't do much good for Germany's top exporters like Siemens (OTC:SIEGY) and Volkswagen (OTC:VWAGY), forcing them to rely more on overseas revenue than sales from the Continent.

Yet Europe's not helping Germany in other ways, either. The European Commission fretted this week over Germany's strong trade balance, concerned that the country's dominant exports -- the key factors that have saved it from Europe's recession – have harmed other European nations' comebacks.

Investors shouldn't worry too much about the EC's hand-wringing, but keep an eye out for how Germany's top exporters diversify away from Europe and toward more promising markets. Volkswagen's done that in a big way with its top position in the Chinese market. In fact, it was China and the North American market -- not Europe -- that fueled Volkswagen's 3.8% growth in group sales in October, a strong mark for such a sizable carmaker.

Long a European and global industrial and conglomerated titan, Siemens is dealing with a downshift of business in Europe. New orders rose in all regions except for the beleaguered continent in the company's disappointing third quarter, for which Siemens released its earnings report last week. Siemens CEO Joe Kaeser hasn't been quiet about some of Germany's own policies that have hurt the business versus global rivals like General Electric (NYSE:GE).

Kaeser singled out German Chancellor Angela Merkel's green energy plans as raising energy costs for the company, giving it a notable disadvantage against the likes of GE and others. General Electric boasts a net margin over the trailing 12 months of more than 9.5%, nearly four full percentage points above Siemens' own net margin of 5.6% over that time frame. If Siemens can't keep diversifying globally and reducing its exposure to troubled Europe, it'll be hard-pressed to keep up with leading rivals like GE.