Financials

World Markets Market Summary Ticker

Sentix's economic sentiment index for the euro zone, based on a survey of 975 investors, fell to 31.1 in December from 34.0 last month.

It attributed the fall to a sub-index measuring expectations about the economy falling by six points.

"Investors are asking whether 2018 can be even better, and are hedging their bets on the future by placing their expectations below those of September 2017," it added. It said the decline was no reason for concern as the fall had come after a 10-year high record readíng. A separate index tracking Germany also fell. Sentix linked the fall to uncertainty created by Conservative Chancellor Angela Merkel's failure last month to form a government with the ecologist Greens and the pro-business Free Democrats.

Merkel has turned to Social Democrats (SPD) in the hope of renewing a "grand coalition" with the centre left party that has ruled Germany for the last four years. It said investors now wanted to know how expensive a tie-up with the SPD, who want to significantly increase investments on infrastructure and education, broaden a social security net and improve worker rights, would be. "The price for a continuation of Merkel's governance and for German finances could be high," Sentix said. "Foreign investors will be particularly paying attention how high the additional spending will be and whether labour market conditions will worsen."

Merkel, whose conservatives were weakened in an election on Sept. 24 that vaulted a far-right party into parliament, is seeking a fourth term.