Business confidence in Germany rose unexpectedly in February for the second month in a row. The Ifo economic research institute said its closely watched index of western German business confidence rose to 88.9, the highest in seven months, from 87.4 in January. Analysts had predicted a decline to 87.0. The increase in January was the first positive move by the index for eight months. The institute surveys more than 7,000 enterprises on their appraisals of the business situation and their short-term planning. Despite an unenthusiastic response from analysts to the surprise increase in the Ifo index, the euro is higher against most currencies this morning, retaking USD1.08 against the dollar.
Even Hans-Werner Sinn, president of Ifo, said that although the upturn in the index was positive, "for a sound judgement, business confidence would have to rise three months in a row". Fourth quarter GDP figures due from Germany tomorrow may reveal that the eurozone's largest economy shrank by 0.1pc in the last three months of 2002. The European Central Bank indicated at the weekend that it is prepared to cut rates again to boost the economy. //www.fxcentre.com