German investor confidence rose for the fourth month in a row to hit its highest level since mid-2010, a closely watched survey showed Tuesday _ another sign that Europe's biggest economy will avoid slipping into recession.
The ZEW institute said its confidence index rose to 22.3 points in March from 5.4 in February, a better performance than the rise to around 12 that economists had expected and the best since June 2010.
Germany's economy so far has emerged relatively unscathed from the debt crisis that has weighed heavily on growth in other countries in the 17-nation eurozone _ though it contracted by 0.2 percent in last year's fourth quarter.
The eurozone crisis appears to have "taken a pause for breath" for now, ZEW president Wolfgang Franz noted.
"In Germany, due to the good employment situation, domestic demand is likely to continue to stimulate growth," he added. "Nevertheless, risks remain due to the low business activity in important European countries and the disruptions in the banking sector."
Economists hope that the fourth-quarter performance was only a temporary blip and Germany will post at least minimal growth in the current quarter to avoid a recession _ defined as two consecutive quarters of contraction.
ZEW pointed to data last week showing that German industrial production returned to growth in January as a signal to markets that slower growth abroad wouldn't seriously damage "robust business activity" in Germany.
Still, investors' assessment of the current economic situation was slightly less bright this month, ZEW said. An index measuring that view slipped to 37.6 points from 40.3.
That "indicates that the recovery in the first quarter could still be limited, probably due to the freezing temperatures in February," said Carsten Brzeski, an economist at ING in Brussels.
But the overall outlook is encouraging and "once the winter freeze is behind, the German economy should also gather pace again," he added.
ZEW polled 285 market experts between Feb. 27 and March 12 for this month's survey.