Key German index rises, offers economic hope

A leading confidence index in Germany published on Tuesday rose in January for the first time in seven months, offering a glimmer of hope for the beleaguered German economy, currently the worst performing in the 12-country euro zone.

The ZEW economic research institute's economic expectations index, based on a poll of 323 analysts and institutional investors, rose by 13.4 points to plus-14.0 points in January, ZEW said in a statement.

It was the first time since June 2002 that the index has risen and was a much better reading than most analysts had been expecting, with forecasts ranging from a renewed fall in the barometer to a slight gain.

"It's the first glimmer of hope on the horizon," said ZEW President Wolfgang Franz.

But he added: "There are of course still substantial risks, such as the outcome of the Iraq crisis and German economic policy."

Feeding the improved sentiment was the expectation that oil prices would fall in the medium term. And the stabilisation on the world's stock markets was also having a positive effect, Franz explained.