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Euro zone sentiment falls in Oct to lowest level since May 2013

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[October 06, 2014]  BERLIN (Reuters) - Sentiment in the euro zone dropped for a third consecutive month in October, hitting its lowest level since May 2013, suggesting the single currency bloc will fall into recession, a survey by Sentix showed on Monday.

Sentix research group's index tracking morale among investors in the euro zone tumbled to -13.7 in October from -9.8 the previous month. That undershot the consensus forecast in a Reuters poll for a reading of -11.5.

"While expectations were only just below the zero-mark in September, they are now clearly in negative territory and that means a technical recession in the euro zone - two consecutive quarters of contraction - is ever more likely," Sentix said in a statement.

"It's conspicuous that neither the European Central Bank's rhetoric nor its measures were able to drive up investors' expectations of the economy this month," Sentix added.

Last week the ECB laid out plans to buy rebundled packets of debt within weeks to shore up the flagging euro zone economy and its president said the bank would do more if needed.

A sub-index of expectations for the euro zone's economy fell to -7.3 in October, its lowest level in two years, after a reading of -2.5 in September.

Investors' perception of the current euro zone situation dropped to its weakest level since August 2013.

An index tracking Germany plunged to its lowest level since September 2012, with Sentix saying investors seemed to be increasingly concerned about economic risks such as tensions over Ukraine and other crises abroad as well as the U.S. Federal Reserve's tighter monetary policy.

(Reporting by Michelle Martin; Editing by Alexandra Hudson)

[ 2014 Thomson Reuters. All rights reserved.]

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