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Eurozone Investor Confidence Unexpectedly Falls

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Eurozone Investor Confidence Unexpectedly Falls

Economic expectations for the Eurozone unexpectedly declined in February, a sign investors are still concerned about the currency region’s fragile recovery.

The Eurozone Economic Sentiment index, courtesy of the Centre for European Economic Research (ZEW), declined from 73.3 to 68.5 in February. Economists in a Reuters survey forecast a slight increase to 73.9. The gauge of the current situation, meanwhile, improved eight points to -40.2.

Institutional investors are probably concerned about the uneven pace of recovery throughout the Eurozone. Combined with almost non-existent inflation, the growth prospects of the now 18-nation currency bloc remain hazy. The negative outlook extends not only to the periphery, but to Germany as well. Although investors gave a strong appraisal of Germany’s current situation, the gauge of expectations fell 6 points to 55.7

“The cautious expectations in this month’s survey are likely to be caused by some uncertainties which came to the fore recently,” read an official press release from ZEW. “Weak employment figures as well as some damped leading indicators have, for instance, caused concern in the US that the current economic upswing could lose momentum. Furthermore, the volatile capital markets in some emerging economies reflect uncertainties regarding their economic prospects in the medium term.”

Overall, however, investors remain relatively optimistic about Eurozone recovery, according to ZEW President Professor Dr. Clemens Fuest. With Eurozone GDP expanding at a faster pace than forecast last quarter, the currency region is expected to forge ahead in 2014. Eurozone GDP expanded 0.3 percent in the fourth quarter, led by France and Germany.

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