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Consumers, industry lead euro zone sentiment rally

Published 04/29/2009, 05:02 AM
Updated 04/29/2009, 05:16 AM

BRUSSELS, April 29 (Reuters) - More optimistic consumers and industry led a stronger-than-expected rebound in euro zone economic sentiment in April, data showed on Wednesday, adding to signs the economy might be bottoming out.

A monthly survey by the European Commission showed economic sentiment in the 16 countries using the euro improved to 67.2 points in April from 64.7 in March, against market expectations of a rise to 65.2 points.

The data adds to similar signs of improving sentiment from other surveys, indicating the euro zone recession might be coming to its low point ahead of a May 7 meeting of the European Central Bank on interest rates.

Markets expect the ECB to cut rates by 25 basis points to 1.0 percent and announce other, non-conventional ways of policy easing, such as buying bank or corporate bonds.

Sentiment improved the most among consumers and in industry, by 3 points in both cases, to -31 and -35 points respectively. Optimism rose slightly also in the services sector, which generates some two-thirds of euro zone gross domestic product.

Sentiment in the retail sector and in construction, however, turned more gloomy.

The survey showed selling-price expectations in manufacturing rebounded to -12 from an all-time low of -14 after a steady decline since July. In the retail sector, selling-price expectations rose to -4 from an all-time low of -7.

But consumer inflation expectations fell further to set a new all-time low of -2 points from 1 point in March, and selling-price expectations in services declined further to set a new all-time low of -9 against -5 in March. (Reporting by Jan Strupczewski, editing by Dale Hudson)

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