* German investor sentiment highest since March
* Private consumption, euro zone sentiment boost morale
* Optimism over euro zone brightest since April 2010
By Sakari Suoninen and Eva Taylor
MANNHEIM, Germany, Aug 13 German analyst and
investor sentiment climbed more than expected in August, a
leading survey showed on Tuesday, suggesting Europe's largest
economy is gradually regaining momentum after suffering a
contraction in late 2012 and a weak start to 2013.
The ZEW economic think tank's monthly poll of economic
sentiment rose to 42.0 from 36.3 in July, reaching its highest
level since March and beating the consensus forecast in a
Reuters poll for a rise to 40.0.
That sent the euro higher and caused Bund futures to extend
"It looks as if there will be a turning point in the coming
weeks. The ZEW proves that," said Thomas Gitzel at VP Bank.
"The latest early indicators and hard facts - such as the
big gain in industry output in June - make the case for an
improvement after a long, dry spell," he added.
Initial signs that the euro zone is emerging from a
recession that took hold in late 2011 likely pushed the index
higher, while solid demand in Germany also helped, said the
Mannheim-based ZEW institute.
Data on Wednesday is expected to show the euro zone economy
grew 0.2 percent in the second quarter. That would be good news
for Germany, Europe's largest economy, which sends some 40
percent of its exports to the single currency bloc.
There have been encouraging signs from struggling euro zone
states of late, with Greece beating its fiscal targets in the
first seven months of the year while Spain and Italy's 10-year
debt risk premiums have hit their lowest in two years.
The ZEW figures chimed with recent upbeat data showing
German industry orders and output surging, the private sector
expanding, exports rising, unemployment falling and sentiment
among both consumers and businesses picking up.
Domestic demand prevented Germany from falling into
recession in the first quarter and consumer morale has surged to
its highest level in almost six years, as Germans benefit from a
stable labour market, wage rises and moderate inflation.
Private consumption is expected to have helped drive an
increase in output of around 0.6 percent between April and June,
according to a Reuters poll ahead of Wednesday's release of
preliminary German gross domestic product (GDP) data.
ZEW economist Michael Schroeder said the rise in euro zone
expectations to 44.0 in August - its highest since April 2010 -
from 32.8 the previous month, was "a good sign that the worst
regarding the recession in Europe might be over".
Nonetheless, German companies have been downbeat about
business in both Europe and emerging markets during the current
earnings season. Consumer goods company Henkel
revised down its growth forecast for emerging markets and
synthetic rubber maker warned sentiment in markets
like China and Brazil as well as Europe was fragile.
The ZEW index was based on a survey of 252 analysts and
investors conducted between July 29 and August 12, ZEW said.