German business confidence posted an unexpected gain in May, raising hopes that Europe's biggest economy will pick up momentum in the coming months, a closely watched indicator released Friday showed. The Munich-based Ifo economic institute said its index measuring the mood among German executives rose sharply to 105.7 points from104.4 in April. Analysts had expected the closely watched index would stagnate in May. "The German economy remains on track in a challenging European environment," said Ifo economist Kai Carstensen. The rise in May ended two consecutive falls in the indicator, which is based on a survey of about 7,000 company executives. Ifo said the index's gauge measuring business expectations came inunchanged at 101.6 points while the indicator gauging currentconditions jumped to 110 from 107.2 in April. This gain was its strongest monthly rise since July 2010. Shares in Frankfurt pulled back from Thursday's steep losses,rising 0.2 per cent after the Ifo's release. The euro climbed 0.4 percent to 1.2988 dollars. The pickup in the indicator followed strong rises in confidence inalmost all sectors of industry, including among Germany's key manufacturers. But the business climate index for the construction sector slipped as the building trade struggled to emerge from a protracted coldwinter.
