Euro zone morale reaches two-year high, confirms recovery under way

BRUSSELS (REUTERS) - Optimism in the euro zone's economy brightened for the fifth month running and hit a two-year high this month, driven by improving confidence across all sectors and confirming that a recovery is under way.

The European Commission said on Friday the 17-nation bloc's morale rose faster than expected to 96.9 from 95.3 last month, the best reading since August 2011. In the wider European Union, confidence was up by 2.4 points to 100.6 points, taking the indicator above its long-term average for the first time since July 2011.

In the euro zone, the positive trend was particularly strong in three out of the bloc's five largest economies, with Spain and Italy rising by 2.5 points and France up by 1.6 points. Sentiment in Germany, Europe's biggest economy, was broadly unchanged, while the mood in the Netherlands worsened by 0.9 points this month.

Across the bloc, employment plans were revised upwards in industry, services, retail trade and construction, the European Commission said.

Separately, the euro zone's business climate, which points to the phase of the business cycle, was broadly unchanged after inching up to -0.2 points from -0.22 last month.

The EU's executive arm said a significantly more negative assessment of past production had prevented an even stronger improvement.

The European Central Bank's president said earlier this month that recent confidence indicators confirmed expectations of gradual improvement in the economy, which is expected to gain a more solid footing next year.

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