* Ifo rise follows increase in ZEW index earlier in week
* Data shows German companies weathering euro crisis well
* Euro gains, German bond futures retreat on data
By Noah Barkin and Sarah Marsh
BERLIN, April 20 German business sentiment
unexpectedly rose for the sixth month in a row in April in a
sign that Europe's largest economy continues to outpace peers
and shrug off persistent worries about the euro zone debt
The Munich-based Ifo think tank said on Friday its business
climate index, based on a monthly survey of some 7,000
companies, inched up to 109.9 in April from 109.8 in March,
taking it to its highest level since July 2011.
Economists polled by Reuters had been expecting a slight
fall to 109.5.
"The impact of the latest wave of the euro crisis on German
business confidence remains small," said Christian Schulz of
Berenberg Bank. "The fundamental strength of the economy
continues to outweigh external worries."
The euro pushed up to a session high against the dollar and
German bond futures erased gains on the numbers, which came days
after another closely-watched German sentiment gauge from the
Mannheim-based ZEW institute pushed to it highest level in
nearly two years.
Europe's 2-1/2 year old debt crisis appeared to be easing in
the first few months of 2012, but worries about the finances of
big economies like Spain and Italy have unsettled markets in
The waning impact of the European Central Bank's massive
liquidity injections has refocused investor attention on banking
sector weakness and the difficulties in pushing through reforms
in southern Europe, where some economies are mired in deep
Ifo economist Klaus Wohlrabe told Reuters that recent market
turbulence related to Spain and Italy had not yet been reflected
in the April report, raising the prospect of a weakening in the
Still, he said demand for German goods from big countries
outside the euro zone, like the United States and China, would
drive export growth in the months ahead.
FOURTH QUARTER BLIP
The German economy has rebounded strongly from the global
financial crisis in 2008/2009, interrupted only by a 0.2 percent
contraction in the last quarter of 2011 when worries over the
euro crisis weighed on exports and private consumption.
Many economists now believe this was a blip, and that
Germany will avoid a recession, generally defined as two
consecutive quarters of contraction.
Germany's leading economic institutes, whose forecasts form
the basis for official government projections, revised up their
forecast for 2012 growth on Thursday, projecting an expansion of
0.9 percent. For next year, they expect growth of 2.0 percent.
This contrasts starkly with the picture in debt-laden
peripheral euro zone states like Greece and Spain which are
mired in recession and have seen unemployment shoot higher.
An Ifo sub-index on current conditions edged up to 117.5 in
April from 117.4, while a reading on expectations was flat at
"This shows once again what good shape German companies find
themselves in," said Andreas Scheuerle at DekaBank.
"The euro crisis is leaving a mark by denting growth. But
given the dimension of the crisis for the euro zone, the damage
to German firms is really minor."
Still some German companies have made clear they are not
immune to the crisis.
German car maker Volkswagen said on Thursday it
was bracing for a "very demanding year" as the European debt
crisis weighed on auto markets and global economic growth
Its truckmaking unit MAN SE announced on Friday
that it planned to slash costs to rein in declining profit,
which fell in the first quarter against a backdrop of rising
competition in core western European markets.
MAN Chief Executive Georg Pachta-Reyhofen said his firm
faced strong pressure on margins, especially in stagnating
markets close to home.