German investor sentiment rises in Jan (AP)

BERLIN ? German investor sentiment rose strongly in January, indicating that economic activity in the country should stabilize over the next six months rather than deteriorate further, a closely watched survey showed Tuesday.

The ZEW investor sentiment index for January rose 32.2 points in January, to minus 21.6 points overall. The rise puts the indicator at its highest level since last July, though ZEW noted it is still well below its historical average of plus 24.5 points.

The survey, which polled 293 analysts and institutional investors from January 2 to January 16 about their medium-term expectations, also saw a 21.6 point rise in economic sentiment toward the 17-nation eurozone, taking the index to minus 32.5 points.

In addition to suggesting that investors expect the German economy to stabilize over the next half year, ZEW said that improved economic data from the United States as well as recent declines in yields from Spanish and Italian bonds may have contributed to the increase.

Even though the government reported in the middle of the survey period that the German economy had likely contracted by 0.25 percent during the last quarter of 2011, the poll also posted a 1.6 point rise in investors' assessment of the current situation in the country, for a 28.4 overall rating.

The investors assessment of the eurozone's current situation dropped 7.7 points, however, to minus 51.8 points overall.

Though there have been fears that the German economy would follow the downward trend of other eurozone nations, ING Global Research economist Carsten Brzeski said the survey indicates "the trough of negativity might be behind."

In fact, he said, Germany may be set to benefit from the weakness of its neighbors.

"With more than 60 percent of all exports going into non-eurozone countries, Germany is among the main beneficiaries of the recent euro weakness," he said. "Moreover, the latest downgrades of nine eurozone countries have rather strengthened than weakened Germany's safe haven role, keeping government bond yields at record lows."

Source: http://us.rd.yahoo.com/dailynews/rss/eurobiz/*http%3A//news.yahoo.com/s/ap/20120117/ap_on_bi_ge/eu_germany_economy

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