Business World

French business confidence rose more than economists forecast in January on signs that the recovery is gaining pace after the worst recession in six decades.

The index of sentiment among factory executives jumped to 92 from a revised 88 in December, Paris-based statistics office Insee said today. Economists expected a reading of 90, according to the median of 18 forecasts gathered by Bloomberg News.

France’s economy emerged from the slump last year, growing 0.3 percent in the second and third quarters. The Finance Ministry said this week that growth accelerated in the three months through December and raised its 2010 forecast, predicting that Europe’s second-largest economy will expand 1.4 percent.

“French industry is benefiting from the pickup in world trade,” said Joost Beaumont, an economist at Fortis Bank Nederland in Amsterdam. “Growth should mainly come from foreign demand.”

French bonds gained after the report, pushing the yield on the benchmark 10-year bond due in 2019 down 2 basis points to 3.43 percent. A basis point is 0.01 percentage point.

French 10-year debt yielded an average 37 fast cash online.18 basis points more than 10-year German securities in 2009, according to data compiled by Bloomberg. The spread today was 23.5 basis points.

“Manufacturers see business significantly improving,” Insee said. “Inventories of finished products are judged to be small and order books, overall and from abroad, are filling up, even if they are still considered much less than full.”

The level of orders from foreign clients now shows a reading of minus 48, up from minus 58 in December, Insee said.

Domestic demand may be restrained by rising unemployment. The Finance Ministry expects France to lose 71,000 jobs this year, mostly in the first half, after shedding 373,000 in 2009.

“We have a recovery and the only question is how strong it will be,” said Pierre-Olivier Beffy, chief economist at Exane BNP Paribas in Paris. “In the U.S. inventories are being re- built and in Europe we are positive on the prospects for France and Germany.”

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