Pledges boost investor sentiment on eurozone

Sentix research group said yesterday its index tracking investor sentiment in the eurozone strengthened to minus 16.8 from November’s minus 18.8, though it fell short of expectations in a Reuters poll that mood would rise to minus 16.0.

A sub-index of current eurozone sentiment rose modestly to 31.0 from minus 31.3, while the expectations component climbed significantly to minus 1.5 from a previous minus 5.5.

The main reasons for the improvement in expectations are the ECB’s measures announced in the summer.

It has taken private investors time to recognise that the ECB’s clear pledge on an “irreversible” euro has led to a turn around,” Sentix said. “All doubts are by no means overcome, but there are increasing signs that some things are improving.”

Late last month the European Union and International Monetary Fund agreed to keep Greece afloat inside the eurozone, by reducing its debt now and hinting at official debt relief to come later, removing the biggest risk of a financial shock that could re-ignite market turmoil.

The Greek deal, coupled with ECB promises to do what it takes to preserve the euro, have boosted market sentiment and brought down the yields of struggling states such as Italy.

A separate index for Germany showed sentiment rising to 13.0 in December from 9.4 last month. An index for investor sentiment in the United States rose to 7.1 from 5.0, one for Asia excluding Japan rose to 26.3 from 21.9, and an index for Japan rose to minus 4.3 from minus 11.7.