Ann: CFU signs new contract with EON for UK marke, page-59

re: Ann: CFU signs new contract with EON for ... Maybe there is a possibility to bring the money from the Germans forward given this.

Feb. 17 (Bloomberg) -- German investor confidence jumped the most in more than 15 years in February after the government stepped up efforts to bolster the economy and the European Central Bank signaled it will cut interest rates to a record low.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations rose to minus 5.8 from minus 31 in January. That’s the biggest gain since July 1993 and the highest level since July 2007. Economists surveyed by Bloomberg News expected an increase to minus 25.

ECB policy makers say they have room to cut borrowing costs further as the euro area battles its worst recession since World War II and retreating energy costs push down inflation. Chancellor Angela Merkel’s coalition on Jan. 12 agreed to spend about 80 billion euros ($102 billion) over two years to boost the German economy, the largest in the 16-nation bloc.

“We expected a significant improvement but the outcome is even better,” said Ralph Solveen, an economist at Commerzbank AG in Frankfurt. “Analysts see that the current situation is catastrophic, that it can’t get any worse, and more and more people are expecting an improvement.”

ZEW said its gauge of current conditions fell to minus 86.2, the lowest reading in five years, from minus 77.1.

‘Substantial Burdens’

“The economy isn’t past the trough,” ZEW economist Sandra Schmidt said in a Bloomberg Television interview. “Developments will remain very weak for a couple of months.”

German gross domestic product slumped 2.1 percent in the fourth quarter of 2008 from the third, the biggest drop in 22 years. The economy will shrink 2.5 percent this year, according to the International Monetary Fund.

Daimler AG, the world’s second-largest maker of luxury cars, today reported its first quarterly loss since 2007. The Stuttgart, Germany-based company said it expects a global recession to erode sales this year and impose “further substantial burdens” on earnings.

Infineon Technologies AG Chief Executive Officer Peter Bauer said on Feb. 12 Europe’s second-largest maker of semiconductors faces “many tough challenges” this year.

Germany’s benchmark DAX stock index declined as much as 2.3 percent today, bringing losses to 10.8 percent this year.

ECB Rates

“We don’t expect to see much more than an economic stabilization in the second half,” said Alexander Koch, an economist at UniCredit MIB in Munich. “The first quarter will still show an ugly economic performance. It’s clear that the ECB will continue to cut interest rates.”

The ECB has lowered its key rate by 2.25 percentage points since early October to 2 percent, the most aggressive easing since the bank took control of monetary policy a decade ago. ECB council member Axel Weber said on Feb. 14 that the bank may “continue to use the room to maneuver on interest rates.”

Economists expect the ECB to reduce its benchmark to a record low of 1.5 percent at its next policy meeting on March 5.

Crude oil prices have dropped more than 70 percent from a July peak of $147 a barrel, damping inflation and increasing consumers’ and companies’ purchasing power.

Merkel’s stimulus program, which includes tax cuts and infrastructure investment, may also help revive the economy later this year. The spending boost amounts to about 1.6 percent of GDP.

Deutsche Bank AG CEO Josef Ackermann said earlier this month that revenue at Germany’s largest bank rose “significantly” in January from a year earlier.

“With all the appropriate caution, this gives us confidence for 2009,” Ackermann said. “We are certain that Deutsche Bank will emerge from this crisis stronger.”

To contact the reporter on this story: Simone Meier in Frankfurt at [email protected].

Last Updated: February 17, 2009 05:57 EST


Interesting article...

Surely if the German Govt see this as having the potential to provide some employment that will be right behind it. Stimulus of 80bil.. Slip us a few bucks, you wouldnt even notice it.