Survey indicates revival in Europe ending 18 months of recession

A survey in Europe indicates a revival of bullish momentum for equities, copper and the euro.

According to Tim Moore, senior economist at Markit, the company that produced the report, the German private sector shook off its recent bout of malaise in July, as stronger manufacturing and services growth underpinned the fastest pace of output expansion for five months.

The market sentiment was also lifting thanks to  well-received earnings figures from Apple, which added to optimism over the health of corporate America as investors continued to weigh in the possibility of the Federal Reserve support waning over the coming months.

The FTSE All-World stock index was up 0.1 per cent at 248.1, only 2 points away from a fresh five-year high, following the Asia-Pacific region dipping 0.2 per cent and as the FTSE Eurofirst 300 advanced 0.6 per cent.

Futures were up in early European trade on news of Germany's manufacturing base expanding again, which together with accelerating activity for the country's service sector – and better French figures pointed to the continent exiting recession in the third quarter.

According to commentators, the protracted eurozone recession may be coming to an end after a survey of thousands of private sector firms across the region found they were growing for the first time in 18 months.

The monthly healthcheck of firms in the euro area showed that manufacturing output was up for the first time since February 2012, with service sector firms also exiting their long decline. France and Germany were leading the way out of the downturn.

According to Markit, the figures showed the eurozone was stabilising.

Markit chief economist Chris Williamson said the best PMI reading for one-and-a-half years provided encouraging evidence to suggest that the euro area could, at long last, pull out of its recession in the third quarter.

Markit's composite PMI was up to 50.4, from 48.7 in June, which came as the best reading since January 2012. A figure above 50 indicated growth.

Germany's service sector growth was up at a five-month high even as French factories, suffered through the country's long downturn, returned to growth with the strongest performance in 17 months.

Economic output in the eurozone had been falling since the last three months of 2011, in what came as the longest recession since the creation of the single currency. Data which would be announced in August would show whether the trend continued in the second quarter of 2013.