German business confidence soars

GERMAN corporate morale surged to its strongest level since reunification this month, showing firms expect the economy to weather a tax hike in 2007 and raising expectations interest rates could rise further.

The Munich-based Ifo research institute said its business climate index, based on a monthly poll of around 7,000 firms, unexpectedly rose to 108.7 from 106.8 in November.

The reading, the highest since the institute began compiling pan-German figures in 1991, surpassed all the forecasts in a Reuters poll of 52 economists and came in well above a consensus for 106.8. Predictions ranged between 105.4 and 108.5.