German Cloud For Europe – US-FOREX.US
An unexpected drop in investor confidence in Germany this month bodes badly for the continent into next year.
The monthly ZEW index of analyst and investor expectations in Germany fell to 39.5 in July from 44.8 in June, an unexpected drop and the first since sentiment began to rebound last November. “We have had an upswing for eight successive months so this is a setback,” said Timo Klein, a senior economist at IHS Global Insight in London. The move mirrors a recent pullback in consumer confidence in the U.S. and could augur badly for the prospects of global demand.
According to Klein, the survey has been a fairly accurate gauge of how the economy is faring six months ahead: for example the November rebound in confidence was reflected in the up tick in industrial production earlier this year. “What we will probably see is an interim recovery [of production now] but a renewed setback in the first half of 2010.”The news came as industrial production within the euro zone rose 0.5%, month-on-month in May – the first increase in nine months. According to IHS Global Insight’s Howard Archer, however, for significant sustainable recovery there would have to be an extended pick up in orders both in the domestic and foreign markets and this is far from certain.
Shares on the Dow Jones Euro Stoxx index were up 1.3%, with the German Dax up 1.6%. Banks and mining stocks lead the way with Xstrata
up 5.9% in London, and Deutsche Bank
up 5.1% in London – helped by high expectations of Goldman Sachs quarterly earnings. British cell phone operator Vodafone missed out on the rally, however, as analysts at UBS downgraded the stock to “neutral” from “buy.” Shares of Vodafone
shed 2.4%, to 112 pence .
In currency markets, the euro rose to 1.39930, from 1.3978, though slipped 0.5% against sterling to 0.8576, from 0.8618.Crude futures rose 1.6%, to 61.25, from 59.69 in New York pre-market trading.