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Investor confidence in Eurozone hits 2 ½ year high: Sentix

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Investor confidence in Eurozone hits 2 ½ year high: Sentix

Investor confidence in the Eurozone unexpectedly rose in November, according to Sentix. The monthly reading of 9.3 exceeded expectations by more than 3 points, and was the highest in 2 ½ years.

The indicator tracked the sentiment of 813 investors between October 31 and November 2. The indicator monitors sentiment toward current euro area economics, as well as future expectations. A reading above 0.0 indicates general optimism, whereas a reading below that level indicates pessimism.

Euro area confidence remained positive for the third consecutive month. Investors were more confident about the current situation, as well as what the near-term future holds. The euro area composite index has risen each month since May, according to a statement from Sentix. The indicator fell in October due to the US budget impasse, which threatened to send the world’s largest economy to default.

Rising investor confidence reflects broader trends throughout the 17-nation currency bloc. Last month the European Commission reported improved sentiment throughout the euro area, due to improved business conditions. The euro area economy is recovering from the worst recession in its history. The second quarter marked the currency bloc’s official exit from recession, after the economy expanded 0.3 percent. Markit Group’s October PMI showed the euro area’s manufacturing industry expanded last month, although recovery was described as “modest and fragile.” Employment prospects remain bleak, as the Eurozone struggles with record high unemployment.

The Eurozone economy is making headway, but ongoing struggles have forced the European Central Bank to consider another round of rate cuts. Inflation unexpectedly fell last month, prompting ECB officials to consider more drastic measures to stimulate the economy. Euro area inflation fell from 1.1 percent to 0.7 percent in October.

The ECB is scheduled to make its next rate decision Thursday. Economists expect the current rate to hold, but a growing contingency of analysts foresee another round of rate cuts in the near future.

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