French business climate brightens

PARIS, France -- Business morale in France jumped this month to its highest level in a year, signalling that a recovery in Europe's biggest economy could be picking up.

France's main business confidence index rose to 102 points in June -- up from 101 in the previous month -- its highest level since June of last year, the national statistics office INSEE said on Thursday

The monthly survey -- based on responses from 4,500 business executives -- was in line with economists expectations.

The biggest reason for optimism was an increase in product orders and demand in June.

The INSEE survey for overall orders and demand improved to minus 14 points last month from minus 16 in the previous month. The reading for foreign orders and demand improved to minus 6 points from minus 12 in May.

"The improvement in overall orders and demand, and in foreign orders is marked,'' Stephane Deo, an economist at UBS Warburg, told Reuters. "They had been the two worrying elements in an almost perfect recovery scenario.''

The French survey was in contrast to the German business index, which showed a drop in confidence in June.

The Ifo economic research institute said that while German companies were comfortable with the current business climate, they expressed concern over conditions in the coming months.

The rise in French business morale is matched by improved optimism among consumers. INSEE said consumer confidence bounced back in May to its highest level this year, after falling to a four-year low in the previous month.

France's economy has also been rebounding after contracting in the last three months of 2001, gross domestic product rose 0.4 percent in the first quarter if this year. Economists expect the economy to grow by around 0.5 percent in the second quarter and by 1.2 percent for the entire year.