Italian business morale unexpectedly fell in December to its lowest level since July as the euro surged, eroding hopes of an impending economic recovery in the euro zone's third-largest economy, analysts said.
Research body ISAE said today its business confidence index fell to a seasonally adjusted 91.2 in December from a revised 94 in November - its lowest level since July when the index hit a 20-month low of 86.7.
Economists had expected a slight increase in business confidence in December after figures released this month confirmed the economy had grown 0.5 per cent in the third quarter following a recession in the first half of the year.
"It really seems to be the euro. The latest surge has reawakened fears among Italian businesses, which have suffered more than their European counterparts," said Mr Raj Gunaratna, an analyst at 4CAST in London.
"It doesn't bode well for growth going forward." The euro hit a new high against the dollar on Monday, rising above $1.2440.
The drop in morale was felt across the board in the intermediate and investment goods sectors as well as among consumer goods firms, ISAE said.