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Business mood brightens further in Germany

Business mood brightens further in Germany
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German business morale rose to its highest level in 20 years in January according to the Ifo economic institute’s monthly survey of seven thousand firms.

That was much better than economists’ forecasts and Ifo said the survey responses showed that German manufacturers “have made a significant leap forward and have now fully recovered from the (2008 financial) crisis.”

The business climate index rose to 110.3 from 109.8 in December, the strongest since records started for reunified Germany at the start of 1991.

Separately, statistics office data in France showed business confidence also rose strongly in the euro zone’s second largest economy, boosted by a surge in manufacturing sentiment.

The euro extended gains against the dollar to briefly hit a two-month high after the data.

The upbeat Ifo reading topped off a run of bullish data that has shown the German economy benefiting rom a rebound in emerging economies.

Germany is bucking the trend of other rich nations, including much of the euro zone, that are still struggling.

Earlier this week, the ZEW Centre for European Economic Research survey also showed German investors increasingly optimistic.

The Berlin government has just raised its 2011 growth forecast, predicting the recovery will broaden to include an upturn for previously lacklustre domestic demand.