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Euro Zone Sentiment Dips in April on Cyprus Woes

Peter Weber | Getty Images

Euro zone sentiment fell for a second consecutive month in April due to concerns over the Cyprus bailout, Sentix research group said on Monday.

Sentix said its monthly index tracking investor sentiment in the 17-nation currency bloc slid to -17.3 this month, its lowest level since last November and below a Reuters consensus forecast for April of -13.1. The index stood at -10.6 in March.

"Just as the Italian election pushed down the index in March, so in April the Cyprus problem, among other issues, proved an additional burden," Sentix said in a statement.

(Read More: Troika Risking Its Credibility on Cyprus: El-Erian)

Cyprus has forced heavy losses on wealthier depositors and agreed to the winding down of its second largest bank in order to secure a 10 billion euro bailout from the European Union and the International Monetary Fund.

Italy, the euro zone's heavily indebted third largest economy, remains in political limbo after a February election gave no bloc enough votes to govern alone.

A Sentix sub-index of euro zone expectations fell to 0.5 in April from 8.3 in March. Current conditions stood at -33.5, down from -27.8 in March.

(Read More: In Desperation, Italy's Leaders Could Turn to Berlusconi)

A separate index for Germany also showed sentiment souring in the euro zone's largest economy. It fell to 17.6 this month - its lowest level since January - from 24.5 in March.

Sentiment indicators for Germany have generally been positive so far this year, suggesting the economy is picking up in the first quarter, though the widely watched Ifo business climate index dipped in March.

Outside the euro zone, the Sentix index for Japan hit its highest level since January 2011 as the Bank of Japan embarked on the world's most aggressive monetary stimulus worth some $1.4 trillion.

The United States also edged higher but Asia excluding Japan drifted lower.

"The global recovery seems still intact but the risks for disruption in this recovery have clearly increased," Sentix said.

Contact Europe: Economy

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