Key sentiment index underlines growth in Europe's largest economy

Published January 13, 2015

A closely watched index of German business optimism rose more than expected in August, underlining improving growth prospects for the struggling euro area.

The Ifo index released Tuesday rose to 107.5 from 106.2 in July. Market analysts had expected 107.0.

The increase in the index — the fourth monthly rise in a row — is a further sign of Germany's improving economy, which expanded a robust 0.7 percent in the second quarter from the previous quarter and helped pull the 17-country currency union out of 18 months of recession. The eurozone expanded 0.3 percent from the quarter before.

But economists say stronger growth is needed to reduce a eurozone unemployment rate of 12.1 percent and cut the heavy debt burdens afflicting governments such as Greece, Spain and Italy.

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