Solid domestic demand protects German Economy

German business confidence rose for the fourth month in a row. Economists are confident that it will grow in the first three months of 2012, avoiding a recession as the increase in the index was greater than expected.

Meanwhile, sentiment weakened after the European Commission’s forecast for economic growth showed that the Eurozone’s economy would contract by 0.3. To put this into perspective, two consecutive quarters of contraction signal a recession . 

Economic sentiment is still at low levels, but stress in financial markets is easing.

In the UK, the Confederation of British Industry said in a report earlier that factory orders rebounded to hit a six-month high this month, with the forecast for economic growth up 0.5% in 2012.

In reaction to yesterday’s news that 82% Government owned RBS  posted £2BN losses over 4 straight years,  the chancellor is attempting to clear up the mess On a pre-tax basis, last year's loss was £766m compared with £399m in 2010.

The pound trimmed gains against the U.S. dollar on Thursday, after U.S. jobless claims remained broadly unchanged and concerns over the economic outlook in the Eurozone continued to weigh on market sentiment.

Jobless claims have remained below 400,000, a level historically associated with an improving labor market, and this is the lowest since March 2008.

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