Wednesday, August 26, 2009
The euro hit a two-and-a-half-month high against the pound after a survey showed confidence among German firms was growing.
The business sentiment indicator from the Ifo Institute rose to 90.5 in August from a revised 87.4 in July.
The unexpectedly strong rise was the fifth consecutive monthly increase, taking the figure to its highest since September 2008.
The euro rose to 87.82 pence, which was up 0.43% on the day.
Growing confidence may be good news for Chancellor Angela Merkel ahead of federal elections on 27 September.
'Relatively fragile'
"These are extremely positive numbers that go well beyond our expectations," said Stefan Schilbe, analyst at HSBC Trinkaus.
"After the positive [economic] growth rate in the second quarter, the upturn will most likely firm up. We're expecting robust growth rates in the second half of the year," he added.
German gross domestic product grew 0.3% in the three months from April to June.
Earlier in August, steelmaker ThyssenKrupp said it had seen signs of recovery among its customers, which include construction, machinery, carmakers and shipbuilders.
"Confidence remains relatively fragile," warned Colin Ellis, European economist at Daiwa Securities SMBC Europe.
"Today's headline figure is still not back to the same level it was at pre-Lehmans - and it will take time for better sentiment to show up in orders and investment."



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