Oct 25 Reuters Euro zone bank lending rebounded more in September, and German business sentiment has improved more than expected this month, bolstering the view that the euro zone economy has bottomed out, even if there is no rapid recovery in sight.

The 20nation bloc39;s economy has expanded at the slowest possible pace for most of the past two years and policymakers have repeatedly pushed out their expectations for a recovery, raising some doubts about whether it is coming at all.

Both reports are encouraging signs rather than signals of stronger turns, JPMorgan economist Greg Fuzesi said.

Lending to euro zone companies grew by 1.1 in September, its highest rate since mid2023, while to households, it was up by 0.7, its highest level since last October, the European Central Bank said.

Absolute lending volumes were relatively modest, however, with loans to households rising by 9 billion euros and to firms by 19 billion euros, the ECB said.

A recent bank lending survey suggested that volumes could rise further though, especially for household mortgages, as ECB rates are already well below their peak and further rate cuts are fully priced in with the key rate seen bottoming out at below 2, less than half its highest rate earlier this year.

Meanwhile, German business morale has improved more than expected in October, an Ifo Institute survey showed, providing some respite for an economy that will likely contract in the second half of this year

The Ifo institute said…