MANNHEIM, Germany, Feb 19 (Reuters) - German investor sentiment soared to its highest level in nearly three years in February on optimism the worst of the euro crisis is over, in the latest sign that Europe's largest economy is bouncing back after a dismal end to 2012.
The Mannheim-based ZEW think tank said on Tuesday its monthly poll of economic sentiment rose to 48.2 points from 31.5 in January, above even the highest forecast in a Reuters poll and well above the consensus for a reading of 35.0 points.
The news, along with other recent data suggesting the German economy will avoid recession, will come as a relief to the centre-right government of Chancellor Angela Merkel, who is campaigning to win a third term in a September election.
'Financial market experts have made their peace with the weak fourth quarter of 2012,' said ZEW president Wolfgang Franz. 'In their opinion the German economy faces less headwinds from the euro crisis than throughout the last months.'
The better-than-expected reading, which a ZEW economist said was also fuelled by low interest rates, boosted the euro and European shares and sent German Bund futures lower.
Sentiment on the current state of the economy worsened however to 5.2 from 7.1 in January, and some economists cautioned that ZEW was better at predicting turning points rather than the pace of growth.
'The ZEW index provides some further evidence that Germany is likely to see a little V-shaped rebound in Q1 after the sharp GDP contraction at the end of 2012,' said Christian Schulz at Berenberg Bank.
Markets will now turn their attention to business sentiment figures from the Munich-based Ifo institute and purchasing managers data, both due later this week, for confirmation of the recovery.
Germany's economy held up strongly during the first 2-1/2 years of the euro zone debt crisis but sputtered in the second half of 2012 as firms postponed investment and exports suffered due to a gloomy economic outlook in Europe and elsewhere.
Hopes for a German, and a broader euro zone, economic upturn have yet to feed through to the real economy, however.
German newspaper Handelsblatt, citing union sources, reported on Tuesday that economic bellwether Siemens may cut 7,000 jobs in Germany. At the moment Siemens employs 129,000 workers in Germany and 405,000 globally.
Data on Tuesday also showed that European car sales fell to a new low in January, starting 2013 with an 8.5 percent decline. Germany in particular weighed on the outlook. After resisting much of last year's slump, Europe's biggest car market is in sharp decline, extended by an 8.6 percent drop in January.
The ZEW index was based on a survey of 272 analysts and investors conducted between Feb. 4 and 18.
(Reporting by Sakari Suoninen and Victoria Bryan; Writing by Annika Breidthardt, Editing by Noah Barkin) Keywords: GERMANY ZEW/
(Berlin newsroom)(Tel: +49 30 2888 5142)(Email:)(email@example.com)
Copyright Thomson Reuters 2013. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.