Euro zone investor morale up as political uncertainty seen waning

BERLIN, (Reuters) - Investor sentiment in the euro zone hit its highest level in almost a decade in May, improving more than expected thanks to a strong assessment of the current economic situation and expectations that political uncertainty will diminish.

Euro coins are seen in front of displayed France flag in this picture illustration taken May 7, 2017. REUTERS/Dado Ruvic/Illustration -

The Frankfurt-based Sentix research group’s euro zone index rose to 27.4 points, its highest level since July 2007, from 23.9 points in April. The May reading surpassed the mid-range forecast of 25.0 in a Reuters poll of analysts.

“Investors are obviously expecting a decrease in political uncertainties in the euro zone,” Sentix said in a statement, adding that investors were taking a more upbeat view ahead of Sunday’s second round of the French presidential election.

Sentix said the current conditions sub-index for the euro zone rose to 34.5 points in May from 28.8, hitting its highest level since January 2008.

A euro zone expectations index rose to 20.5 points from 19.3 points in April, reaching its highest level since August 2015.

An index for Germany hit its highest level since March 2015.

“The German economy remains in excellent shape,” Sentix said.

By contrast, an index for the United States fell as investors were turned off by U.S. President Donald Trump.

“The ‘attractiveness’ of Trump’s policy is becoming increasingly smaller,” Sentix said.

Sentix polled 1,063 investors from May 4 to May 6.

Writing by Paul Carrel; Editing by Catherine Evans