German business sentiment rises in April: Ifo

Business confidence in Germany has risen from record lows, a key index showed on Friday, offering a small ray of hope following a week of dire forecasts for Europe's biggest economy.

After quizzing 7,000 German companies in manufacturing, construction, wholesaling and retail, the Ifo institute said its closely-watched indicator rose to 83.7 points in April, from an all-time low of 82.2 points in March.

"It is thus likely that the (rate of) decline in economic output will slow clearly," said Ifo head Hans-Werner Sinn.

The gain was significantly better than analysts surveyed by Dow Jones Newswires had expected. They were anticipating a rise to 82.3 points.

Economists see the Ifo index as a key leading indicator to gauge the future health of the economy. It has been falling steadily -- with occasional blips -- since June 2008 as sentiment among corporations plummets.

A sub index that measures the current business situation rose to 83.6 points from 82.7 points.

The world's top exporter is presently in the grip of its worst recession since the 1930s amid falling demand for cars, machines and chemicals "made in Germany" as the financial crisis bites all around the world.

This week has seen a slew of dire forecasts for Germany, with the IMF predicting output to shrink by 5.6 percent in 2009 and a group of top economic institutes projecting a slump of six percent this year.

Berlin is poised to issue its own view of the economic prospects on April 29 and Finance Minister Peer Steinbrueck has already acknowledged that output will contract by at least five percent.

Nevertheless, there has been some light to lift the gloom, with some tentative signs that the nadir of the crisis has been reached.

Along with the surprisingly good Ifo indicators, another index measuring sentiment among financial market players posted its first positive reading in almost two years on Tuesday, leading some to predict the economy could begin to pick up in the second half of the year.