Buoyant France pushes up eurozone economic confidence

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A more than six-year high in French economic confidence has helped the eurozone report another rise sentiment this month.

The European Commission’s monthly gauge of economic sentiment accelerated by 1.1 points in France to its best level since the midst of the eurozone crisis in June 2011, in another sign that market jitters about the country’s forthcoming presidential election have not hit the real economy.

Overall sentiment in the eurozone inched up by 0.1 points to 108 in February – its best level since March 2011 – with Spain and France the biggest gainers among the bloc’s largest member states. The economic sentiment measure dropped by 0.8 points in Germany to a four-month low.

French bond markets have been roiled by the country’s unpredictable election race which kicks off with a first round vote in late April. Yields on the country’s 10-year bonds hit an 18-month high of 1.15 per cent earlier this month following the fall from grace of François Fillon – who had been favourite for the job.

But bonds have rallied strongly in the last few days as the latest polls show Marine Le Pen’s margin will still suffer a heavy margin of defeat against Emmanuel Macron in the second round vote (read more here).

Separate surveys of French businesses and consumer also show little signs of pre-election jitters. France’s latest fourth quarter GDP figures will be released later this week.

Following another tumultuous month in its bailout talks, economic confidence in Greece fell sharply by 2.2 points.

Across the EU as a whole, confidence rose by three points to 108.9 with the UK’s post-Brexit resilience showing further signs with a 2.3 point climb. That takes its sentiment measure to the best level since late 2015.

Bond chart via Bloomberg

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