July 25, 2012 / 2:09 PM / 5 years ago

UPDATE 1-Belgium's July leading indicator unexpectedly rises

(Adds background, analyst comments)

BRUSSELS, July 25 (Reuters) - Belgian business confidence, a bellwether for the euro zone, unexpectedly rose in July, with improvements in all sectors, but economists said that it was too early to predict a trend reversal as Europe’s economic problems persist.

The business confidence index, often referred to as the leading indicator, increased to -11.3 from -13.2 in June, the central bank said on Wednesday. It outperformed a Reuters poll forecast by 12 economists, who expected a decline to -13.6.

The increase was most pronounced in the business services sector, where the reading turned positive for the first time since March.

“Entrepreneurs assessed the level of activity more positively, and they are also optimistic about demand forecasts,” the central bank said in a statement.

Earlier on Wednesday, Germany’s Ifo institute released its closely watched business climate index, which fell for the third month in a row in July to its lowest level in 28 months.

In this context, economists said that the improvement in Belgium should not be taken as a trend reversal.

“Given the unresolved problems in Europe, we won’t see a big improvement in the coming months, even though this is a small improvement today,” Hans Bevers, an economist at Petercam, said.

Belgian consumers were less optimistic in June, after confidence hit a seven-month high in May.

Euro zone leaders want to lift stalled economic growth and employment after 2-1/2 years of crisis and austerity, but the bloc has little immediate cash to invest and faces the longer-term challenge of falling productivity and an ageing workforce.

The Belgian central bank expects the country’s economy to grow by 0.6 percent in 2012 and by 1.4 percent next year, following growth of 2.0 percent in 2011. (Reporting by Brussels newsroom; Editing by Susan Fenton)

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