German investor confidence at a high after Nov turnaround

Frankfurt

GERMAN investor confidence rose to the highest level in a year in February, buoyed by the imminent arrival of fresh central-bank stimulus.

The ZEW Centre for European Economic Research in Mannheim said on Tuesday that its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to 53.0 from 48.4 in January. Economists had forecast an increase to 55.0, according to the median of 32 estimates in a Bloomberg News survey.

Growth accelerated at the end of last year in Germany, the region's largest economy, helping the rest of the currency bloc to better-than-forecast output. With oil prices and the euro sinking, and the European Central Bank scheduled to start quantitative easing next month, investors have stayed upbeat even as the mounting risk of a crisis in Greece threatens renewed turmoil.

"Since the turnaround in November, the ZEW investor economic sentiment indicator has increased steeply, outperforming expectations," Societe Generale SA economists including Anatoli Annenkov in London said in a note. "Growth could continue to surprise on the upside at the start of 2015."

A gauge of the current situation climbed to 45.5 in February from 22.4 the previous month, ZEW said. A measure of expectations for the euro area rose to 52.7 from 45.2. The survey of 227 analysts was conducted from Feb 2 to Feb 16.

The Bundesbank said on Monday that the German economy has overcome last year's weak phase faster than expected and growth this year will probably exceed its December forecast. The Frankfurt-based central bank previously predicted the country's economy would grow 1 per cent in 2015. The European Commission this month forecast an expansion of 1.5 per cent.

The outlook remains clouded by the intensification of the Ukraine crisis and the "collision course" of Greece's new government, ZEW President Clemens Fuest said in the report. Even so, ZEW economist Michael Schroeder said German investors are relatively sanguine on Greece.

"It is a completely new situation, but the general opinion on Greece leaving the eurozone is more or less relaxed," he told reporters.

Greece's government has rejected the austerity terms of a bailout, posing the danger that it'll be unable to finance itself. Negotiations in Brussels on Monday collapsed after Greek Finance Minister Yanis Varoufakis refused to meet European demands that his country request an extension of the programme, which is due to expire on Feb 28.

In a separate report, the number of people employed in Germany's manufacturing sector rose to a record high of 5.3 million at the end of last year, data from the Statistics Office showed on Tuesday, underscoring the strength of the mighty sector of Europe's largest economy.

The increase of around 57,000 took staffing levels in the sector to the highest since the data was first collected in 2005, the Office said.

Germany's DIHK Chambers of Commerce expect this upward trend to continue, partly thanks to booming exports. BLOOMBERG, REUTERS