German Ifo Sentiment Index Falls as Crisis returns to Europe

German business morale fell in March, breaking a four-month run of gains and highlighting concerns the reignited debt crisis in the euro zone will test the resilience of Europe’s largest economy.

The Munich-based Ifo think tank said on Friday its business climate index, based on a monthly survey of some 7,000 firms, fell to 106.7 in March, down from 107.4 in February and below a forecast of 107.6.

Months of relative calm in the euro zone came to an end with an inconclusive election in the bloc’s third-largest economy Italy, and a crisis over emergency funds for Cyprus that could culminate in the island state exiting the common currency.

Ifo economist Klaus Wohlrabe said more than 85 percent of survey responses had come before the latest developments in Cyprus, whose leaders are scrambling to strike a bailout deal with international lenders to avert a banking collapse and sovereign default.

via Reuters

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