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German morale highest since 2006

Tuesday, December 17 12:27:02

German analyst and investor sentiment leapt in December, hitting its highest level in nearly eight years and suggesting growth in Europe's largest economy will pick up next year.

The Mannheim-based ZEW economic think tank's monthly poll of economic sentiment, published today, climbed to 62.0 from 54.6 in November.

That was much higher than the consensus forecast in a Reuters poll of economists for a rise to 55.0 and sent the euro higher against the dollar. ZEW economists cited an improved outlook for the U.S. economy as a major factor.

"Current German indicators point to decent growth in the coming year and the massive increase in the ZEW index certainly fits this picture," said Thomas Gitzel at VP Bank.

"Growth of 2 percent seems realistic for the coming year - even the pessimists are gradually having to recognise that."

Other recent sentiment indicators have also been upbeat, with surveys showing business morale at its strongest level in 1-1/2 years and the mood among consumers at a six-year high.

Earlier on Tuesday, Germany's Ifo institute said its business climate index pointed to faster economic growth next year. Ifo's index for December, due to be published on Wednesday, is expected to rise.

The German economy slowed in 2012 and early 2013 after steaming ahead during the early years of the euro zone crisis but bounced back in the second quarter. Growth was slower but still solid in the third quarter and economists expect a similar result for the final three months of the year.

ZEW President Clemens Fuest also said survey participants were quite optimistic about next year: "Despite rather disappointing economic data recently, the financial market experts expect economic development in Germany and the euro zone to improve further in 2014."