29 June 2004, 10:58  French business morale risesslightly in June

French business morale rose slightly in June, backing up other recent signs of strengthening recovery in the euro zone's second biggest economy and bucking falls in Germany and Italy, official figures showed on Tuesday. National statistics office INSEE said its monthly index based on interviews with business leaders rose to 105 from 104 in May. The rise in business morale was in line with market expectations. Economists polled by gave a mid-range forecast for a reading of 105. The rise in the index to 105 took it back up to the level hit in April, which was the highest reading since April 2001. "Business leaders think activity remains dynamic," INSEE said in a statement accompanying the survey. Last week, INSEE raised its 2004 growth forecast to 2.3 percent from 1.7 percent, saying growth was taking hold and predicting a surge in investment but no quick fix to unemployment levels of almost 10 percent. Tuesday's report showed managers became less downbeat about the future, with the "general business outlook" read-out rising to minus three from minus five in May.
In Germany, the Ifo institute said last week its business climate index fell in June as the 7,000 firms it surveys grew more pessimistic about both current and future prospects. Italian business confidence also fell in June. Economists are looking to industry to drive the recovery in France as households, worried about unemployment and price rises, hold down spending. Consumer spending slid 0.2 percent in May, figures released last week showed. Businesses have been more upbeat, with carmaker Peugeot forecasting record sales this year. "Peugeot will continue its growth in 2004," Frederic Saint-Geours, chief executive of the Peugeot arm of PSA Peugeot Citroen , said earlier this month. "We see today that to have the whole European market at the same level as 2003 is something we can keep as a forecast."///

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