Business leaders in Europe are more optimistic than at any time since the 2009 recession, despite the recent failure of Portugal's largest bank and a sharp decline in relations with Russia, a survey of CEOs showed on Tuesday.
"On the back of continued low interest rates and other stimulus measures administered by the European Central Bank, the mood among European Union CEOs has improved significantly over the last five quarters," said the Young Presidents' Organization (YPO) in its CEO sentiment survey for the second quarter of 2014.
The increase in sentiment comes despite worsening geopolitical tensions, with Europe imposing sanctions on Russia following its incursion into Ukraine, and ongoing fighting in all of Gaza, Iraq and Libya.
There are also renewed fears about the region's banks, after the collapse of Portugal's largest bank by market cap and its subsequent $6.6 billion bailout by the government this week.
Michele Raucci, an Italian financier and YPO member, told CNBC the bailout of Banco Espirito Santo was actually positive for Portugal's economy.
"The situation in Portugal is more of an issue for shareholders than for the economy itself. The economy does very well on this kind of restructuring, because the government is going to put more money into the economy," he said on Tuesday morning.
Notably, executives in Portugal, Greece, Italy and Spain are now more confident in their countries' prospects than those in economically stronger euro zone members.
"Less than two years after bailouts of Greece and Spain and the financial shock in Cyprus, the debt-laden euro zone periphery economies as a group became significantly more optimistic than the core economies for the first time in five years, a phenomenon that continued into the second quarter," said the YPO, following its survey of nearly 3,000 global CEOs in the first two weeks of July.
It added that CEOs now needed to see geopolitical stability in Europe alongside, "cohesive and credible" signs that governments are committed to boosting private sector activity.
Low interest rates and stimulus programs in other key markets like the U.S. and Japan helped boost global CEO confidence to a more-than-three-year high. Rosier outlooks in every region except Latin America contributed to the increase.
Confidence in Latin America was hit by uncertainty ahead of Brazil's national elections this October and Argentina's recent sovereign debt default.
Business sentiment in the U.S. rose to its second-highest level in the five-year history of the survey, on the back of strong second-quarter economic data and a faster pace of job creation. Official estimates suggest its economy grew by an annualized 4.0 percent in between April and June this year.
—By CNBC's Katy Barnato