Recent economic evidence for the Eurozone remains muted. Eurozone growth picked up in the fourth quarter, reflecting strength in retail sales, new orders and, importantly, business and consumer sentiment. The Markit Eurozone sentiment indexes all improved at the end of 2016, with the services index showing strong results, the manufacturing index finally moving into positive territory and consumer sentiment becoming less negative. Political risks are elevated, however, with elections due in 2017 in Germany, France, the Netherlands, and probably Italy.
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