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German business confidence returns
BERLIN, Germany -- Business confidence in Germany rose for the first time in eight months in January, but it was too early to tell if Europe's largest economy was in an upturn, the influential Ifo business institute warned. The German business climax index, a monthly survey of 7,000 leading companies, rose to 87.4 points from a revised 87.3 in December, slightly below expectations. The index was stabilising at a low level, with minimal improvements in both conditions and expectations, Ifo president Hans-Werner Sinn said in a statement. "All in all, it is still too early to say there is an upturn on the basis of these data,'' Sinn said. Ifo reported modest improvements in both the assessment of current conditions -- to 77.1 in January from a revised 76.9 in December -- and expectations, to 98.1 from a revised 98.0. There was a slight improvement in the climate for construction and wholesale, but expectations in the manufacturing sector dropped and retailers' assessments of their current conditions also slumped. "It is a positive surprise that expectations have risen given the stronger euro and crisis in Iraq which might have been expected to dampen them. It indicates that a floor has been found and would indicate an economic recovery in the second half of the year, all depending on Iraq and the euro,'' Ralph Solveen, economist at Commerzbank, told Reuters. Eastern Germany's business climate also rose, to 97.4 from 97.2 in December, the second consecutive month of improvement. Economists had forecast slight improvement after November's stronger-than-expected 2.4 percent rise in industrial production from October plus similarly hopeful manufacturing orders. The January data comes a day before the German government presents its annual economic report. According to a summary leaked to Reuters on Monday, the government will announce it has cut its growth forecast for 2003 to one percent from 1.5, and will urge its citizens to unite in an "Alliance for Renewal.''
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