Expectations in the eurozone rise to highest level since 2007

EUROZONE sentiment improved for a sixth consecutive month in February with expectations rising to their highest level since June 2007, before the financial and debt crises, Sentix said yes- terday.

The research group said its monthly index tracking investor sentiment in the 17-nation currency bloc climbed to -3.9 in February from -7.0 in January, compared to a Reuters consensus forecast of -3.0.

“The overall index shows that the eurozone economy is about to grow again,” Sentix said in a statement, adding that it expected the index to move into positive territory soon, probably next month.

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“Investors have needed quite a long time to recognise that since last summer (with ECB and politicians’ statements on the euro ...) a fundamental and positive change has taken hold,” it added.

A sub-index of expectations rose to 15.8 in February, its highest level since June 2007, from 12.0 in January.

Current conditions rose to -21.8 in February from -24.3.

A separate index for Germany showed sentiment rising to 24.3 in February, its highest level since July 2011 and up from 17.7 with expectations jumping to 22.1 from 14.6.

Meanwhile, eurozone factory prices fell for the second month in a row in December, mirroring the trend in consumer inflation and leaving room for a possible European Central Bank interest rate cut to revive the weak economy.

Prices at factory gates in the 17 countries using the euro fell 0.2 per cent in December from November, the EU’s statistics office Eurostat said, as expected by economists polled by Reuters.

Prices fell by the same margin in November. Compared to the same month a year ago, the producer price index was up 2.1 per cent in December, almost the same as annual consumer inflation that was 2.0 per cent in January and neared the ECB’s target of close to, but below, 2 per cent.

The ECB’s governing council kept rates at 0.75 per cent at its January meeting and will discuss rate policy again on Thursday. The decision to keep policy on hold was unanimous last month, but economists are divided over the ECB’s future moves.