Business confidence in Germany and France, the biggest economies among the dozen euro nations, probably stayed near the highest level since 2001 this month with the stronger euro clouding prospects for future gains, surveys of economists showed.
The Ifo institute's index of western German executive sentiment, one of Europe's most-watched economic indicators, stayed at 96.8 this month, the median forecast of 40 economists showed.
In France, business confidence probably climbed to the highest since May 2001.
European Central Bank president Jean-Claude Trichet has said he's "concerned" about recent currency shifts.
"There's no reason to push the panic button, though the ECB should have a strong interest in stopping the euro's increase," said Stephan Rieke, an economist at ING BHF-Bank AG in Frankfurt.
So far, "the boost from the global economy is compensating for the strong euro, but the pressure is rising." Ifo's report is scheduled for release on Tuesday at 10am in Munich. Executives' assessment of current conditions probably climbed for a fourth month while expectations of future business declined, separate surveys shows.
The Paris-based statistics office Insee will probably say on Thursday that executive optimism rose to 102.5 from 102 last month, according to the median of 24 estimates.
Faster growth in the US and Asia is spurring a recovery across the dozen-nation euro region after its economy shrank in the second quarter. The ECB forecasts the economy will expand about 1.6 percent this year from 0.4 percent last year.
Belgian business confidence, a bellwether for Europe, climbed to a 20-month high this month, a report showed on Friday.
"The recovery is intact," said Carsten Klude, head of strategy at Hamburg-based MM Warburg, which manages about US$18 billion. "The euro is a risk, but it's one that hasn't crystallized yet."
Still, with the stronger currency damping prospects for Europe's main driver of growth, the ECB's Trichet is seeking to stem its appreciation. So far, his efforts have met with only partial success.
The euro, which rose to a record of US$1.2899 on Jan. 12, dropped as much as 4.4 percent in the following six sessions after the ECB's chief said "brutal moves" in the foreign exchange markets are unwelcome.
The currency has since reversed much of that drop and bought US$1.2679 at 3:30pm on Friday after its biggest weekly gain against the US currency in 10 months.
So far, there are few signs of a consumer recovery across Europe. French consumer spending growth slowed in the fourth quarter and Italian households were more pessimistic this month than at any time in the past 10 years as the collapse of dairy company Parmalat Finanziaria SpA fueled concerns about job security and household savings, reports last week showed.
In Germany, retail sales dropped for a second year last year and Wella AG, a maker of hair-care products, said on Friday that the country's consumer goods market is still "difficult."
Spanish unemployment probably climbed to 11.3 percent in the fourth quarter from 11.2 percent in the previous three-month period, according to the median forecast of eight economists surveyed by Bloomberg News before a report on Wednesday.
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