Eurozone plugs up confidence

Economic activity in the eurozone was gathering momentum on the back of rising business confidence, Germany's Ifo economic research institute said Thursday.

Its closely-watched business climate index rose for the second consecutive quarter, the Munich-based research group said, showing a reading of 100.3 points for the first quarter of 2012, compared to 84.8 points in the final three months of 2011.

However, the barometer was still "falling well short" of an average reading of 109 points, scored in times of normal business activity, which indicates that uncertainty about the eurozone economy remained high, Ifo pointed out.

Sharp contrasts

The latest index gauged responses from 279 eurozone business leaders, and shows vastly diverging opinions about economic prospects in the 17-nation currency zone.

Business confidence was "good" in Germany and Estonia, Ifo said, while respondents from Finland described the economic situation there as "satisfactory."

"Bad but improving" was the situation in Austria, the Netherlands, Belgium, Ireland and France, Ifo said, adding that no changes in business climate were reported from crisis-stricken countries Greece, Portugal, Italy and Spain in which high unemployment and high public debt were "weighing" on business activity.

Ifo's findings clash with those of British research group Markit which saw the eurozone continuing to languish in a depressed mood.

Markit's Purchasing Managers' Index (PMI) dropped to 45.9 points last month from 47.7 in March - its lowest reading since 2009.

As firms cut workers at the fastest pace in two years and factory orders fell for the 11th straight month, Markit said that a fresh economic downturn would loom for the currency area.

uhe/gb (Reuters, dapd)