Berlin  - German business confidence rose in June, economists expect a key survey to be released Monday to say, with the boardrooms in Europe's biggest economy now believing that the global recession has started to loosen its grip on the nation.

In a major test of the economic mood in Europe, the closely- watched Ifo business confidence index is foreseen edging up to 85 points in June to record its third consecutively monthly rise.

Based on a survey of 7,000 German executives and drawn up by the Munich-based Ifo economic research institute, the index has shown a steady rise lately after slumping to a 26-year-low in March amid fears about the fallout from the steep global economic downturn.

However, the May increase to 84.2 points was less than expected with analysts having also predicted that the Ifo climate change index would climb to 85 points last month from 83.7 points in April.

Nevertheless and in line with other key European economic sentiment indicators, the Ifo has gained ground on hopes that a string of big government fiscal stimulus packages around the world and hefty global interest rate cuts would help pave the way for an economic pickup going into 2010.

German investor confidence jumped to a three-year high in June, a key indicator released last Tuesday showed.

The Mannheim-based Centre for European Economic Research (ZEW) said its index measuring the mood among analysts and institutional investors posted its eighth consecutive monthly rise, climbing to a more-than-forecast 44.8 points in June.

Even so, the German economy is forecast to shrink by 6 per cent or more this year with growth in particular dragged down by exports as a steep fall in global trade undercuts foreign orders for the world's biggest exporting nation.

Monday's Ifo index will also set the stage for the release in the coming days of new round of monthly sentiment surveys.

This includes German and French consumer confidence reports as well as key European purchases managers' reports along with business sentiment indicator for Belgium, which is considered to be a bellwether survey for the 16-member eurozone. (dpa)