UPDATE 2-German institutes see growth outlook rosy, balanced

* Headline ZEW index rises above forecast

* Data points to strong, balanced growth outlook

* Current conditions measure rises, but less than expected

* Ifo hikes 2010, 2011 German growth forecasts

* Euro pares gains against dollar after ZEW, then recovers

(Adds economist quotes, background)

By Sakari Suoninen and Josie Cox

MANNHEIM, Germany, Dec 14 (BestGrowthStock) – A bright outlook for
exports and domestic demand points to a balanced growth picture
for Germany, though the country’s current economic mood is a
touch less upbeat than expected, sentiment data showed.

Tuesday’s survey from the ZEW economic think tank showed
headline analyst and investor sentiment improved in December to
4.3 from 1.8 in November, beating the consensus forecast of 4.0
percent in a Reuters poll.

“Besides momentum from export activities, economic stimulus
is also expected from domestic demand, supported by a positive
labour market development and low real interest rates,” ZEW
President Wolfgang Franz said in a statement.

Separately, the Munich-based Ifo institute said rising
domestic investment and private consumption would drive the
German economy forward in 2011 as it raised its growth forecast
for this year and next. [ID::nLDE6BD0ST]

The findings reinforced an increasingly stark contrast
between the outlook for Europe’s dominant economy and the states
on the single currency zone’s periphery.

Germany suffered its biggest postwar recession in 2009 when
the economy contracted by 4.7 percent. Driven by exports and
helped by stronger-than-usual consumer sentiment, it has emerged
quickly from the slump, leaving many of its euro zone peers
trailing.

A separate ZEW index tracking current conditions rose to
82.6 from 81.5 the previous month, less than the 84.0 forecast.
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To see a Reuters Insider TV interview with ZEW Economist
Christian Dick, click on: http://link.reuters.com/rub89q
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Following the data — which coincided with broader euro zone
figures showing industrial production increased less than
expected in October — the euro briefly pared gains against the
dollar before bouncing back. [ID:nLDE6BD0PH] [ID:nBRLENE69G]

A BROADENING RECOVERY

The upbeat message from the ZEW and Ifo chimed in with a
positive outlook from flagship German tourism group TUI AG
(TUIGn.DE: ), whose CEO said trading for the current winter season
was up year-on-year in all its source markets. [ID:nLDE6BC1BL]

“With private consumption picking up, the recovery is
broadening further and should continue at its current pace,”
said Carsten Brzeski from ING Financial Markets. “Any slowdown
in 2011 should be rather limited.”

Austerity measures to reduce public sector deficits are
squeezing activity in a number of European states, but Germany
is proving more resilient so far to budget cuts, a subdued
global trade environment and a strong euro. (EUR=: )

Its growth slowed to 0.7 percent in the July-September
period but the upswing remains on a broad and firm footing,
pointing to solid, if unspectacular expansion in coming
quarters.

But recent indicators suggest Germany is now poised to
strengthen its performance with domestic demand playing an
ever-more important role — as France and other European Union
peers have urged.

Ifo said it now expects gross domestic product to expand by
3.7 percent this year and by 2.4 percent in 2011 — up from June
forecasts for growth of 2.1 percent this year and 1.5 percent
next year.

“For now it seems that investors see the recent upbeat
global data and the weaker euro as more than offsetting the
negative effects of the euro zone fiscal crisis on the German
economy,” said Ben May from Capital Economics.

EU leaders are due to discuss the crisis at a summit on
Thursday and Friday, with one senior EU source saying intense
efforts were under way behind the scenes to find ways to shield
Spain from market pressure expected to mount early next year.

The ZEW’s monthly index was based on a survey of 266
analysts and investors and conducted between Nov 29 and Dec 13.

(Writing by Brian Rohan; editing by John Stonestreet)

UPDATE 2-German institutes see growth outlook rosy, balanced