--Data Suggest EMU Economy May Bottom Out At Mid-Year
--Data Suggest Time for ECB Rate Cut Has Come

FRANKFURT (MktNews) - The Handelsblatt eurozone leading economic indicator was unchanged in March, after having falling the five previous months, signalling that Europe's economic slowdown may bottom out in mid-year, the German business daily said Monday.
The March indicator stabilized at a level of 2.9%, but is still 0.8 percentage points below its recent peak of 3.7% reached last September. Handelsblatt's Germany indicator, published last week, also stabilized after falling four times in a row.
Ahead, the indicator signals a slowing of the annual growth rate to 3.3% in the first quarter and to 3.0% in the second quarter, the newspaper wrote.
"The indicator's recent stabilization signals that the (economy's) low point may be passed by mid-year," the Handelsblatt said. "However, this will depend on further developments in the global economy, and the outlook for the United States remains uncertain."
Handelblatt argued that the data supported a near-term ECB rate cut. "The long time lag of about one year between montary policy measures and their impact on the real economy suggest that the time for an interest rate cut has come," the Handelsblatt said.
The creator of the index, Ulrich van Suntum, argued for a rate cut in an interview with Market News published last Friday, and suggested that slowing monetary growth could limit economic growth.
Among components of the index, both industrial and consumer confidence indicators of the EU Comission deteriorated, but monetary and other data provided positive signals.
The industrial confidence and the consumer confidence, which together have a weight of 50% in the index, continued to deteriorate in February.
Nevertheless the level of industrial confidence is still positive (+1 point) and historically relatively high (average -8 points). The latest fall was mainly due to lower production expectations, whereas new orders remained stable.
Also, at -2, consumer confidence remains above its long time average of -13 points, the paper said. The February confidence decline was entirely due to a more skeptical view in regard to the overall economic situation, whereas the expectations concerning the personal situation even improved.
The industrial production continued to develop dynamically and increased 1.3% in December m/m and was 8% up y/y.
M2 money supply growth, another subcomponent stood at only 2.4% in January, after 3.7% in the previous months. Thus current monetary growth is just high enough to finance rising prices and leaves hardly any leeway for real economic growth, the Handelblatt said.
The interest rate differential, another component of the index, was virtually unchanged, rising from 0.2 to 0.3 percentage point.