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Surprise rise in German business morale dispels recession fears

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Christian Fernsby |
Germany port
Europe   The growth outlook for Germany's export-reliant economy has been clouded

German business morale improved unexpectedly in March after six consecutive drops, a survey showed on Monday.

The growth outlook for Germany's export-reliant economy has been clouded by trade disputes triggered by U.S. President Donald Trump's 'America First' policies and the risk of Britain crashing out of the European Union without an agreement.

The Munich-based Ifo economic institute said its business climate index rose to 99.6 from an upwardly revised 98.7 in the previous month. This beat a consensus forecast for a reading of 98.5.

The euro, as well as government bond yields and stocks in the single currency bloc rose after the rise in German business sentiment took the edge off market fears about a dire economic outlook.

"The German economy is showing resilience," Ifo President Clemens Fuest said.

Companies were more satisfied with their current business situation and they were more optimistic about their business outlook for the coming six months, the survey showed.

"Brexit uncertainty is particularly hitting the industrial sector. The other sectors don't appear to be affected," Ifo economist Klaus Wohlrabe told Reuters.

Wohlrabe said the survey results supported Ifo's forecast that the German economy would grow by 0.6 percent in 2019.

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