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German investor faith marks a high

GERMAN investor confidence rose to its highest level in nearly two years in April, reflecting cautious expectations that the economy may recover this year with the help of government stimulus packages, a closely watched survey found yesterday.

The ZEW institute said its monthly index rose for a sixth consecutive month to 13 points in April from minus 3.5 points in March.

It was the first time since July 2007 that the index was in positive territory and the best showing since June 2007, when it stood at 20.3.

However, the survey, which measures the expectations of financial experts in Germany, Europe's biggest economy, for the next six months, remained well below its historical average of 26.1 points.

The April reading points to "well-founded expectations that the downward dynamics of the business cycle are bottoming out," ZEW President Wolfgang Franz said in a statement.

"It is even becoming more likely that the economy will slowly recover in the second half of this year," he added.

Stimulating effect

The ZEW said its index was "positively affected by the government stimulus packages, which are increasingly effective" and that low inflation supported private consumption.

The German government has put together stimulus packages worth some 80 billion euros (US$130 billion), featuring among other programs a popular car-scrapping bonus that has been credited with sharply boosting new car sales.

The ZEW said investors' assessment of Germany's current economic situation stabilized in April, with an index measuring that aspect dipping by a modest 2.2 points in April to minus 91.6 points. The ZEW pointed to an improvement in the United States economic outlook and "slightly positive impulses" from countries such as China.

It said investors' outlook for the 16-nation euro zone rose sharply in April, with that indicator up to 11.8 points from minus 6.5 in March. But their view of the euro zone's current situation worsened slightly, dipping to minus 93 from minus 90.7.


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