Europe welcomes signs of recovery

But central banks and some economists are cautioning against reading too much into all the recent data that suggest glimmers of a much-welcome recovery from the global credit crisis. They warn about the possibility of a damaging “double-dip’’ recession.

“There’s good reason to be cautious,’’ Ben May, European economist at Capital Economics in London, said yesterday. “The surveys still aren’t great, and in the hard data there hasn’t been convincing signs of a pickup.’’

Still, stock markets have risen and many recession-weary consumers appear to be focusing on reports such as those out yesterday showing that access to credit is improving and the rate of job cutting is slowing in Britain, while business confidence rose in France.

Economists are forecasting that the drastic plunge in growth for the 16 countries that use the euro will have slowed when figures for the second quarter are released on Thursday, to a 0.5 percent contraction, compared to the quarter before - a significant improvement on the 2.5 percent plunge in the first quarter.

In Germany, Europe’s biggest economy, rising business and consumer confidence have been underlined by more solid signs of recovery, such as solid month-on-month increases in exports and industrial orders. German exports - the economy’s backbone - were up 7 percent in June, their biggest rise in nearly three years, although they were still down 22.3 percent on the year; industrial orders were up 4.5 percent in June, following a 4.4 percent rise in May.

In Spain, the number of claims for unemployment benefits fell for the third straight month in July, the biggest monthly drop in claims since July 2004. And an 11 percent fall in car sales in the same month was seen as a major improvement - in a market seen as a key indicator - over the 30-40 percent falls recorded in previous months.

The relatively good news - compared to the economic woes reported almost daily in recent months - has prompted a rise in consumer confidence across Europe, resulting in an increase in retail sales and a tentative return by buyers to the housing market.

Britain’s Center for Economics and Business Research predicts house prices will start rising again in 2010 after the falls caused by the credit crunch.

“For a couple months there was an excessive fear, compared to the reality of the economy, and now people are realizing that things aren’t really as bad as they had heard,’’ said Marc Touati, an economist at Paris-based brokerage Global Equities.

Touati and other analysts warned against celebrating any recovery, highlighting the risk next year of the second half a so-called double-dip - when a nascent recovery sputters out and turns into another recession.

“The economy is moving in a good direction, but it’s very fragile,’’ Touati said. “We must continue to be very careful.’’