Berlin- Economic confidence in Europe bounced back in April, according to key report released Wednesday, adding to hopes that the region might now have passed the trough in the current downturn. In a major test of the mood in Europe, the European Commission's closely watched economic sentiment indicator for the 16-member eurozone rose from a record low of 64.7 in March to 67.2 in April, to reach its highest level since January.

However, low inflation means that the European Central Bank is likely to press on next month with its rate-cutting cycle.

The commission's survey is the latest in a string of leading European sentiment surveys pointing to an economic turnaround by the end of the year as the global economy emerges from its biggest slump since World War II.

German business confidence hit a five-month high in April, a key report released last week said with the surveys also showing a pickup in the mood of industry in France and Belgium.

The release of the surveys coincided with a stronger-than-forecast rise in the currency bloc's purchasing managers' index (PMI), with talk of better economic times ahead also emerging from the world's two powerhouse economies - the US and China.

The improvement in the sentiment surveys came despite a steady stream of bleak economic data underscoring how the global recession tightened its grip on the eurozone in the first months of the year.

Unemployment in Spain soared to 17.36 per cent in the first quarter as the numbers out of work rose to over 4 million. Unemployment stood at 13.9 per cent in the last quarter of 2008.

The German Government has cut its economic forecast and now expects the eurozone's biggest economy to contract by 6 per cent this year as production and exports fall steeply and order books contract dramatically.

But also helping to raise hopes that the worse might now be behind Europe were fresh figures released Wednesday from Germany's key plant and machinery sector.

The VDMA industry group said new orders for Germany's key plant and machinery sector fell a real 35 per cent in March compared to the same month last year.

However, the slump in March was less than steep year-on-year falls in the two previous months with orders plunging by 49 per cent in February and by 42 per cent in January.(dpa)