TUESDAY JULY 24 2001 Fear of German recession fuels fall in euro BY GARY DUNCAN, ECONOMICS CORRESPONDENT FEARS that Germany is succumbing to recession grew yesterday after a key gauge of the country’s business climate slumped to its lowest levels for nearly five years. The closely watched Ifo index, regarded as a reliable guide to the outlook for the eurozone’s biggest economy, fell in June to a worse than expected 89.5 — its weakest since August 1996.

The index showed that German companies’ assessment of both current business conditions and future prospects continues to deteriorate.

The data will add to pressure for action from the German Government and the European Central Bank (ECB) to shore up activity.

Hopes that the ECB will bow to calls for an interest rate cut were boosted by regional figures showing weakening inflation in Germany and Italy.

However, the latest worries over German growth combined with comments from Paul O’Neill, the US Treasury Secretary, to send the euro sliding once more against a resurgent dollar.

After Mr O’Neill dismissed talk of a shift in America’s strong dollar policy, the US currency jumped more than half a per cent against the euro and the yen, and by more than 1 per cent against the pound.

Pressure on the yen was heightened by further bleak economic news from Japan, which sent Tokyo’s Nikkei index to 16-year lows.

http://www.thetimes.co.uk/article/0,,5-2001252917,00.html

-- Martin Thompson (mthom1927@aol.com), July 23, 2001

Answers

You've got to wonder if contagion will be the winner. Here we have hints of hitting bottom, and an impending resurgence. This could all go down the drain if countries like Germany, Japan, Brazil, and Argentina succumb.

-- Uncle Fred (dogboy45@bigfoot.com), July 24, 2001.