Оct. 27 (Bloomberg) -- Business confidence in Germany, France and Italy, the three biggest countries sharing the euro, probably rose this month, as faster growth abroad boosted optimism among exporters, surveys of economists showed. The Ifo institute's index of western German business confidence, based on a survey of 7,000 companies, rose to 92.2 from 91.9 in September, according to the median forecast of 26 economists in a Bloomberg News survey. Similar indexes in France and Italy are also seen rising. The three countries account for about three-quarters of the region's $8 trillion economy. European Central Bank President Wim Duisenberg said last week he's ``very confident'' about a recovery. More evidence of whether executives share his view will come in third-quarter earnings reports from companies including Volkswagen AG, Europe's biggest carmaker, and Deutsche Bank AG this week.
Signs of ``a recovery in Germany are boosting optimism in other European countries,'' said Francesca Panelli, an economist at Aletti Gestielle Sgr in Milan. Germany accounts for a third of the euro region's economy. A survey of more than 25,000 companies by the DIHK industry group published last week showed the share of managers who expect business to get better increased to 29 percent in October from 17 percent in the DIHK's June survey. Bayerische Motoren Werke AG Chief Executive Officer Helmut Panke on Wednesday reiterated the world's second-biggest luxury carmaker expects to match last year's record profit as sales rise with the introduction of new models.
Growing Faster
Faster growth in the U.S., Japan and the U.K. is helping economies in the euro region return to growth. The U.S. economy, the world's largest, probably expanded at a 6 percent annualized rate in the third quarter, based on the median estimate of 52 economists in a Bloomberg News survey. Britain's economy expanded 0.6 percent in the third quarter from the second. Rising stock markets suggest investors are optimistic that a recovery will result in rising corporate earnings. Germany's benchmark DAX 30 index has gained 48 percent from a seven-year low in March. France's CAC 40 index has increased 30 percent and Italy's Mib30 index advanced 19 percent in the same period. Ifo, one of Germany's six leading economic institutes, will release its October survey on Tuesday at 10 a.m. in Munich. Economists also expect an increase in sub-indexes measuring companies' current business conditions and future expectations.
Travel Recovery
Vacation bookings for the winter season at TUI AG, Europe's largest travel company, are up 5.2 percent from last year as consumers step up spending on travel, Chief Executive Officer Michael Frenzel told financial daily Boersen-Zeitung. TUI, based in Hanover, Germany, also boosted winter bookings in its ``difficult'' home market by 2.5 percent, Frenzel said, according to Saturday's edition of the newspaper. Italy's business confidence index, which will also be published on Tuesday, probably rose to 95.5 from 94.5, the median forecast of 15 economists surveyed by Bloomberg News showed. The index, published by the Rome-based Isae institute, dropped in August after surging to a nine-month high in July. In France, whose economy contracted more than Italy's and Germany's in the second quarter, executives may have also become more optimistic amid increased signs of a European rebound. The business confidence index, published Thursday at 8:45 a.m. in Paris, will rise to 94 in October from 93 in the previous month, the median forecast of 16 economists showed.
Belgian Boost
Belgian business confidence, which some economists view as a leading indicator for Europe, rose to an eight-month high in October, as manufacturers' order books improved, the country's central bank said on Thursday. About three-quarters of Belgium's exports are sold in other European Union nations. The European Commission publishes its business confidence report, based on a survey of 25,000 companies, for the whole euro region on Friday at noon. That index probably rose to minus 8 from minus 9, according to the median forecast of 22 economists surveyed by Bloomberg News. One risk to the recovery is the increase in the euro's value, economists said. The common currency has gained 21 percent against the dollar in the past year and is trading close to its May record of $1.1933. Exports in Germany, France and Italy fell in the second quarter as the rising euro made European goods more expensive overseas. The euro bought $1.1746 at 8:27 a.m. in Frankfurt, down from $1.1781 on Friday.
`Acid Test'
The coming weeks ``will be the acid test for the recovery,'' said Carsten Klude, head of strategy at M.M. Warburg & Co. in Hamburg, which manages $17 billion. ``Expectations for a European recovery are very high and the danger is that they may not be sustainable because of the strength of the euro.'' Exports account for about a fifth of the economy of the 12 euro nations, and are equivalent to about a third of Germany's gross domestic product. German Economics Minister Wolfgang Clement on Friday said that the dollar's weakness could become a ``problem'' for European exports, unless China and Japan allow their currencies to move more freely against the U.S. currency. Duisenberg has said he is ``not worried'' about the euro's current exchange rate, suggesting the bank sees no need to sell the currency to slow its appreciation. The ECB says that the euro's strength helps contain inflation in the euro area. The central bank is expected to keep borrowing costs unchanged until about the middle of next year, interest rate futures trading suggests. The yield on the three-month Euribor for June 2004 rose to 2.49 percent at 8:30 a.m. in Frankfurt, compared to a current three-month lending rate of 2.13 percent. //www.bloomberg.com