German blue chips rose to new 4-year highs, and have gained 21.3% so far this year. The sustained rally in the DAX index boosted German business sentiment to its highest level in nearly five and a half years in December, in the latest sign that Europe´s largest economy is gathering momentum heading into 2006. But private consumption, which accounts for some 60% of the economy remains weak, weighed down by double-digit unemployment. Germany´s growth rate has been running at an anemic 0.8% rate, but German firms were profiting from sustained export demand and growth in orders in China. The ECB raised its repo rate a quarter-point to 2.25% earlier this month, but reassured investors that it was not the beginning of a series of rate hikes.
Editor's Note: US investors can access German market via ETF EWG