the currency bloc's second and third biggest economies - which could help to stabilise business confidence in the surveys to be released this week. These are forecast to show France's business climate index dipping to 105.5 in September compared to 106 in August. Business confidence in Italy is also essentially expected to move sideways from 98.3 in August to 98 in September. Indeed, a healthier consumer demand in France and Italy marks them out from Germany, where domestic demand appears unable to recover from a protracted period of stagnation as a result of continuing high unemployment and increased welfare charges generated by the government's reform agenda. At the same time, however, data released last week showed Italian consumer confidence rising for fourth month in a row in September, while French consumer spending rose by a modest 0.5 per cent in August after posting a sharp slump in July. Economists had forecast a 2.2 per cent drop in French consumer spending with the rise following a dip in July unemployment in the country to 9.8 per cent. That said, however, economists expect eurozone growth to have slowed during third quarter principally because of the higher energy costs. After chalking up a 0.5 per cent growing rate in the second quarter, third-quarter growth in the currency bloc is expected to ease slightly. Moreover, the rebound in oil prices (which at one point last week showed energy prices creeping back up again towards the key 50 dollar-a-barrel mark) is likely to be a reminder for business leaders of the continuing economic threat posed by high energy costs. --SP 2355 Local Time 2055 GMT
