July 9, 2018 / 8:54 AM / a year ago

Euro zone investor morale bounces but outlook uncertain - Sentix

FILE PHOTO: The signature of the President of the European Central Bank (ECB), Mario Draghi, is seen on the new 50 euro banknote during a presentation by the German Central Bank (Bundesbank) at its headquarters in Frankfurt, Germany, March 16, 2017. REUTERS/Kai Pfaffenbach/File Photo

BERLIN (Reuters) - Investor morale in the euro zone rose in July to end a five-month run of declines, a survey showed on Monday, but research group Sentix said the spectre of escalating trade tensions with the United States risked depressing sentiment again.

Sentix’s index for the euro zone rose to 12.1 from 9.3 in June. The Reuters consensus forecast was for a fall to 8.2.

“This development is unlikely to herald the start of a new upswing,” Sentix said in a research note.

“If U.S. President Trump now targets the European car industry, the trade dispute could lead to more than a slowdown in economic sentiment,” it added.

Trump threatened last month to impose a 20-percent import tariff on all EU-assembled vehicles, which could upend the industry’s current business model for selling cars in the United States.

Trump also hit the EU, Canada and Mexico with tariffs of 25 percent on steel and 10 percent on aluminium at the start of June, ending exemptions that had been in place since March. The EU and Canada responded with their own levies on U.S. goods.

China has also hit U.S. goods with tariffs in response to Trump’s decision to impose levies on Chinese imports, spooking German manufacturers who rely on the world’s two largest economies for growth.

A Sentix index of German investor morale fell to 16.2 from 18.5 in June, registering the sixth decline in a row and hitting its lowest level since February 2016.

Sentix surveyed 917 investors between July 5 and 7.

Writing by Paul Carrel, editing by Thomas Escritt

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