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During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Eurozone Inflation Pressures Ease


Underlying price pressures in the euro zone eased in November as inflationary influences fell in Germany and France, an index compiled by the Economic Cycle Research Institute showed on Friday.

ECRI, which designs indices aimed at predicting business cycles in leading economies, said its Eurozone Future Inflation Gauge (EZFIG) fell to 96.5 in November from 98.3 in October.

"Although the (gauge) dipped in its latest reading, it is well above its December 2003 low," ECRI said. "Thus it is premature to predict that actual inflation in the euro zone will ease any time soon."

Euro zone inflation was running at 2.3 percent year-on-year in December, above the European Central Bank's 2.0 percent ceiling.

However, a Reuters poll this week showed many economists expect the strength of the euro and weak economic growth to ensure the ECB waits until the final months of this year before starting to raise interest rates from a historic low of 2.0 percent.

The ECRI gauge aims to anticipate cyclical swings in the region's inflation rate and changes in official interest rate policy by measuring underlying inflationary pressures, rather than actual inflation rates.

It is similar to ECRI's inflation indices for the United States, Britain and Japan.

The gauge for Germany fell to 81.2 in November from an upwardly revised 85.8 in October...

ECRI said the German gauge remained well above its December 2003 low of 73.7 and it was too soon to predict a decisive downturn in German inflation.

In France, the index edged down to 102.5 from an upwardly revised 102.6. ECRI said the gauge remained close to October's 30-month high. "Thus French inflation is unlikely to ease in the coming months."

The falls in the German and French gauges were partly offset by rises in Spain and Italy. The Italian gauge rose to 99.9 from a downwardly revised 99.7 in October, while the Spanish gauge rose to 132.9 from 132.5.

The euro zone gauge uses a weighted average of ECRI's indices for Germany, France, Italy and Spain...