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Euro zone economy on the up again

Tuesday, March 24, 2015 - 02:12

Euro zone businesses ramped up activity this month, suggesting the ECB's bond buying programme is already paying off. David Pollard reports.

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Berlin on the move. Capital of a German economy's that's gaining pace - and pulling Europe along with it. Euro zone manufacturing is at a 10-month high, according to the latest numbers from Markit. Services at a 46-month high. The two together giving the best combined reading in four years. In Frankfurt, they're delighted too - as German shares continue an upward streak. Time to pause for breath, says trader Fidel Helmer. (SOUNDBITE) (German) HEAD TRADER AT HAUCK AND AUFHAEUSER BANK, FIDEL HELMER, SAYING: "Think about how at the end of last year, the most optimistic prognoses for the DAX in 2015 were at 11,000 and now we are already seeing over 12,000. That there now has to be a consolidation phase which might last one or two weeks is simply healthy.'' Mario Draghi may already have been briefed on the latest data when he spoke to European lawmakers in Brussels on Monday. Talking up the ECB's recent policy moves - resurgent demand for bank loans, he says, supporting recovery. Lending hasn't risen in nearly three years. But data due later this week is expected to show a rise. JP Morgan strategist, Kerry Craig. SOUNDBITE: Kerry Craig, Global Market Strategist, JP Morgan, saying (English): ''The turn of the credit cycle in the euro zone, for us, is one of the key reasons we think the growth out of the euro zone is going to be much better over the coming years. The ECB QE programme can deliver confidence, can deliver a boost to consumer and investor sentiment, but long-term you actually need credit growth to drive the economy forward.'' Here in Paris - perhaps a sense of work still to be done. French economic activity has expanded for the second straight month. Manufacturing, though, struggling. SOUNDBITE: Kerry Craig, Global Market Strategist, JP Morgan, saying (English): ''That's because they're going through a slower pace of reform. You have seen that improve lately - we have seen the Macron law, we've also had a recent round of elections which showed the Le Pen party didn't gain as much as expected so perhaps we'll see more stability in the government and more reforms in the future. But ultimately the pace of reform in France isn't keeping up with the rest of the region.'' As for euro zone prices: they gave their strongest reading in 8 months - but are still contracting. What the ECB wants - an upward surge in inflation - not on the cards quite yet.

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Euro zone economy on the up again

Tuesday, March 24, 2015 - 02:12