Upbeat German investors

Investor sentiment in Germany rose sharply this month, spiking 23.4 points to 34.9 in December, according to an investor confidence index by Germany's non-profit Center for European Economic Research (ZEW).

The monthly index measures investors' economic outlook for the next six months. December's figure was the second consecutive increase and took the reading to a seven-month high, despite the survey logging its 22-month low in October at minus 3.6 points.

The long-term average now stands at 24.4 points.

The Mannheim-based institute said there was abundant evidence that faith in Germany among financial market experts was being restored, amid falling oil prices and a weaker euro.

"This positive trend could be seen in the recent data for German exports," ZEW President Clemens Fuest said, referring to the promising increase in German factory orders.

"But it should be noted that the current economic optimism is fostered by factors that can change quickly," he added.

Mixed signals

But some analysts were more wary of the rosy outlook in Europe's top economy, as they believe the ZEW index is volatile and, therefore, not especially reliable.

German recovery "will be steady rather than spectacular," requiring additional policy support in Germany and the eurozone as a whole to boost growth, said Jennifer McKeown, senior European economist at Capital Economics in London.

She noted December's sharp rise in the ZEW index is an encouraging sign, but the spike is at odds with what she considers a more reliable indicator - the purchasing managers' index (PMI).

Germany's PMI disappointed investors on Tuesday, when it fell to 51.4 in December from a final reading of 51.7 in November.

This month's reading was above the 50-point threshold, denoting growth for the 20th consecutive month, but it was the lowest reading since June 2013 and far below levels seen earlier this year.

el/hg (AP, Reuters, AFP)