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Confidence up in Europe but remaining low

EUROPEAN business and consumer confidence climbed for the third month in a row in June but still languished near its lowest point in two decades, the European Commission said yesterday.

It said the main players in the economy "seem to be gaining confidence that the crisis is easing" as industrial and services companies expect to be employing more people in future and consumers are worrying less about losing their jobs.

European Union officials warn against these apparent green shoots signaling an end to the recession, saying the pickup in confidence doesn't go beyond expectations and companies have not yet reported an increase in output.

More optimism among consumers, the services sector and industry pushed an indicator of economic sentiment to 73.3 in June from 70.2 in May in the 16 nations that use the euro, EU officials said. Across the 27-nation EU it rose to 71.1 from 67.9. Despite the improvement, some economists said this was still a "clearly recessionary" level.

The European Commission echoes this in a report on the euro economy saying that "the magnitude of the rebound remains relatively small."

A separate EU survey of euro zone industry managers indicated it was too soon to call an end to the economic downturn. Manufacturers' forecast for orders hit new record lows, it said, warning that industrial output is likely to stay subdued in June after shrinking in May.

More consumers said they saw the overall economy and their personal finances getting better over the next year. They also said they were slightly more likely to make major purchases now and in the next 12 months.

The EU's three largest economies - Germany, Britain and France - "recorded significant increases in sentiment," the EU said, with smaller hikes in Poland, Spain, the Netherlands and Italy.


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