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Confidence in eurozone rises on hope crisis over
Aggregated Source: Shanghai Daily: Business

CONFIDENCE in the eurozone economy grew by more than expected in May, with hope that the worst of the crisis may be over spreading to countries that have been on its frontline.

Economic morale in the 17 states that use the euro rose by 0.8 point to 89.4, the European Commission said yesterday. Economists polled by Reuters had expected an increase to 89.

"This is in line with a moderate improvement, but we need to see this sustained," said Francois Cabau, an economist at Barclays Capital. "We also need to see this translate into the real growth."

In Greece, the first eurozone state to be bailed out and heading for its sixth straight year of recession, sentiment climbed to a five-year high, while Portugal and Italy also recorded stronger readings.

"For the crisis countries, (this data offer) yet more signs that the worst is over. Southern Europe saw some of the strongest improvements," Christian Schulz, senior economist at Berenberg Bank, wrote in a note.

The OECD said on Wednesday that the eurozone economy will contract by 0.6 percent this year, rebounding by 1.1 percent in 2014 - a more pessimistic picture for the bloc than predicted by the European Commission, which sees a 0.4 decline this year.

After a strong start to the year, economic morale eased in March, clouding hopes for swift recovery. But in May confidence rose in Germany, France, Italy, Spain and the Netherlands.

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