The Euro Zone got a shot in the arm from the economic indicator when German's ZEW institute disclosed that investor optimism index witnessed surprisingly upside in February. This is a ten month high for the region and came on the back of improved economic conditions in the U.S.
The news is a big boost for the European Zone as it has been badly mauled during the last one year plagued by debt crisis. German's investor optimism index registered a strong upside to 5.4 points on top of a minus 21.6 points in January. The expectation was for a reading of around minus 11.8 to a gain.
The latest developments also come on the heels of Greece adopting austerity measures amidst opposition and protests. In fact the debt crisis was threatening to percolate to other countries in the Euro Zone. Therefore, the news from Germany on investor optimism is somewhat a much needed vitamin to awaken the depressed sentiments hanging over the region.
The Institute disclosed that the reading indicated clearly that a slowdown witnessed in Germany will not last long and the country could soon come back to growth prospects. Though the first two quarters are not likely to see any significant turnaround, the second half of 2012 is likely to turn into a positive one for the country.
The investor optimism is driven by robust job data in the largest economy of the world during the recent month. The news that European Union officials are taking steps to arrange for loan to Greece to save the nation from default situation is also viewed positively.
German's investor optimism also vindicated optimists belief that the economy in the Euro Zone is somewhat trying to get stabilized rather than getting it collapsed as feared by some pessimists. Surely, the sentiment has risen after Greece struck a deal to defuse its debt crisis.
The news was greeted by stock markets when the bourse extended its largest gains in a week. This is despite Moody's Investors Services downgrading six European Countries in view of concern over institutional reform and economic ambiguity. The rating agency also reduced its outlook of UK, Austria and France on the triple- A ratings to ‘negative'.
The countries that were downgraded by Moody's on Monday were Spain, Italy, Portugal, Slovakia, Malta and Slovenia with ‘negative' outlook.
During the day, Euro Zone also reported industrial production that slipped in December indicating economic downside to close the year 2011.