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Germany radiates confidence as another business indicator rises

After investors and consumers expressed upbeat moods in surveys earlier this month, German business leaders are now trumpeting economic recovery. The Ifo business climate index rose more than expected as a result.

German business sentiment rose to its "strongest in eight months" in March, offering fresh evidence that Europe's biggest economy will dodge a recession, the Munich-based Ifo economic think tank said Monday.

Ifo's business climate index – based on a monthly survey of some 7,000 companies – edged up to 109.8 points from 109.7 points in February.

The rise beats expectations by analysts who forecast the index to remain unchanged in a poll carried out by Reuters news agency.

In addition, the figure adds to signs that the German economy may avoid a contraction in the first quarter, as predicted for the eurozone in a purchasing managers' index published by Markit research group last week.

Outlook brightening

Germany's export-led economy contracted in the last quarter of 2011 as the debt crisis spread from Greece to key European trading partners.

However, Ifo's subindex on expectations showed German business leaders remain confident about a recovery in the first quarter of 2012.

The reading rose to 102.7 points from 102.4 in February. In addition, the general situation of German businesses was perceived to be "stable."

As a result of brighter figures from Germany, some of the country's economic think tanks have raised growth expectations for 2012.

The IWH group, based in Halle, last week reversed its 2012 growth forecast to 1.3 percent – almost double the 0.7 percent growth predicted by the government.

uhe/gb (Reuters, dpa)