BERLIN/LONDON (Reuters) – Soaring German business morale and news of a massive surge in the British economy on Friday gave the clearest signs yet that Europe is accelerating, even as fears mount of a slowdown in the United States.

A call for an immediate start to tax hikes and spending cuts from European Central Bank President Jean-Claude Trichet, a day after his U.S. counterpart talked of ways the Federal Reserve could counter a slowing American economy, underscored the divergence in tone.

Business morale in Europe’s No.1 economy Germany posted a record jump in July to reach its highest level in three years, according to the closely-watched Ifo survey, which showed consumer spending was energized by the soccer World Cup.

“These numbers are just insane,” said Ralph Solveen of Commerzbank. “The companies are not letting themselves be distracted by all the negative discussions going on such as the bank stress tests, the debt crisis or the threat of a double-dip recession in the United States.”

Fears of a U.S. double-dip were exacerbated by indicators on Thursday showing that sales of previously-owned U.S. homes hit a three-month low in June and new claims for jobless benefits surged last week.

There are also signs that the pick-up in European activity might not be sustainable. While euro zone purchasing managers indexes on Thursday also showed a surprise bounce overall, foreign demand for German manufacturing goods eased down a gear in July.

In Britain, official figures showed the economy grew 1.1 percent in the second quarter — the biggest rise in four years and almost twice the rate forecast in a Reuters poll of 55 economists.

BERLIN, July 23 (Reuters) – German business sentiment leapt by a record margin in July to reach its highest level in three years, fuelled by a World Cup buzz that boosted consumer spending in Europe’s largest economy, a survey showed on Friday.

The unexpected jump, which boosted the euro, pointed to strong economic growth in the current quarter, though if the German recovery continued to be export-led, weaker countries in the single currency zone might suffer, analysts said.

The Munich-based Ifo economic think tank said its business climate index, based on a monthly survey of some 7,000 firms, rose this month to 106.2 from 101.8 in June.

This lifted the indicator to its highest level since July 2007 and was way above the mid-range forecast in a Reuters poll of 42 economists for a dip to 101.6.

“The German economy is in a party mood,” Ifo said. “The increase is the largest since German reunification (in 1990).”

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Graphic comparing German IFO and PMIs

BUDAPEST/BERLIN, July 21 (Reuters) – Hungarian Prime Minister Viktor Orban said on Wednesday his government would discuss the 2011 budget only with the EU and long-term negotiations with the IMF, Budapest’s other international lender, were pointless.

Orban noted that Hungary’s deal with the International Monetary Fund, part of a rescue to avoid a financial meltdown in 2008, expires in October — when his centre-right Fidesz party also has to fight municipal elections.

But Orban, speaking on a visit to Berlin, did not say whether his government still wanted to seek a new precautionary deal with its international lenders for 2011 and 2012, following the suspension of talks with the EU and IMF last weekend due to an impasse over budget cuts.

Most analysts have said Hungary, which runs central Europe’s highest public debt at 80 percent of GDP, needs a safety cushion from the IMF and European Union in case sentiment on world financial markets turns negative.

But they say Orban has taken a tough line with the IMF over demands for cuts partly to avoid voters deserting his Fidesz party in the local elections on Oct. 3.

“We need to reach agreement not with the IMF, but with the EU, on how we reduce our deficit from 3.8 percent to a level below three percent as expected by the European Union,” Orban told a news conference with German Chancellor Angela Merkel.

“We need to negotiate that with the European Union. We will do that,” he said through an interpreter. “Our budget for next year we will do with the European Union in accordance with these negotiations.”

BERLIN, July 21 (Reuters) – Hungarian Prime Minister Viktor Orban said on Wednesday that he would discuss the upcoming budget with the European Union but there was no point discussing long-term issues with the International Monetary Fund.

Speaking at a news conference with German Chancellor Angela Merkel in Berlin, Orban said Hungary needed to agree with the EU – and not the IMF — how the country reduces its deficit, because its agreement with the fund expires in October.

“Therefore it makes no sense to negotiate long-term questions with the IMF,” Orban said through an interpreter.

“We need to reach agreement not with the IMF, but with the EU, on how we reduce our deficit from 3.8 percent to a level below 3 percent as expected by the European Union.

“We need to negotiate that with the European Union. We will do that,” Orban added. “Our budget for next year we will do with the European Union in accordance with these negotiations.”

The forint tumbled more than 3 percent on Monday after talks between Budapest and the IMF and EU were suspended and Hungary rebuffed calls for tougher spending cuts.

The lenders suspended a review of a 20 billion euro funding agreement signed in October 2008 to avert financial meltdown.

BERLIN, July 19 (Reuters) – Germany’s financial market watchdog is investigating a newspaper report alleging that an Iranian-owned bank in Germany is helping the Islamic Republic do business linked to its nuclear programme, the government said on Monday.

According to the Wall Street Journal, the European-Iranian Trade Bank AG — called EIH Bank in Germany — has done more than 1 billion dollars’ worth of business for Iranian firms, including some blacklisted by the United Nations, the United States and the European Union.

Citing Western officials, the newspaper said EIH “appears to have been involved” in a broad sanctions-evasion scheme, doing deals for Iran’s state-run Bank Sepah, which is under international sanctions for aiding Iran’s sensitive nuclear work.

EIH said it was observing the relevant rules and was regularly audited by German supervisory authorities.

“(The bank) strictly fulfils all prevailing mandatory legal rules and export regulations, (and also) obeys all sanction regulations applying in the Federal Republic of Germany and the European Community,” it said in a statement.

Germany’s Finance Ministry said the central bank and financial market watchdog BaFin were investigating the matter.

“The banking oversight currently has no findings about the infringements reported, but BaFin and the Bundesbank are investigating these accusations against this bank,” ministry spokesman Michael Offer told a news conference.

BERLIN, July 13 (Reuters) – Chancellor Angela Merkel begins a five-day visit to Russia, China and Kazakhstan on Wednesday in a bid to establish a stronger foothold for German industry, bolster its energy supply and address security concerns.

Merkel, who has endured a torrid few months at home, will be travelling with a delegation of top business leaders aiming to sign a series of lucrative deals in export markets from which German industry has profited greatly over the past decade.

China’s moves to make its yuan currency more flexible, civil unrest in Kyrgyzstan and beefing up Germany’s access to oil and gas are likely to be on Merkel’s agenda when she meets the countries’ leaders in coming days, government officials said.

The trip should be a welcome distraction for the embattled chancellor, whose popularity slumped to a record low in recent weeks when she suffered an embarrassing rebellion in a presidential vote that undermined her authority at home.

German government officials said the growing economic importance of China and the wealth of natural resources in central Asia made it imperative for Germany to strengthen its ties in the region.

All three were modernising fast and looking to make big investments. “That’s why the timing of this visit is so important,” one of the officials told reporters.

Merkel’s first stop will be in Yekaterinburg in central Russia, where she meets Russian President Dmitry Medvedev. From Thursday, she will spend three days in China, a bulwark of demand for German goods in the economic crisis.

BERLIN, June 30 (Reuters) – Rebels in Chancellor Angela Merkel’s coalition forced her candidate for the presidency of Germany to a third round of voting on Wednesday, in a dramatic display of disenchantment with her leadership.

Merkel desperately needed a decisive victory in the federal assembly that elects the head of state to boost her authority after a series of poor showings in opinion polls and setbacks including the resignation of Horst Koehler as president in May.

For only the third time in post-war history a presidential election went to a third round after Merkel’s candidate Christian Wulff failed to win enough votes in a federal assembly where her camp held a comfortable majority on paper.

Analysts said the contest raised doubts about her future after what one called a “slap in the face” for the 55-year-old chancellor, who has run Germany since 2005.

“Maybe someone wanted to send a message to the leadership. Great idea. Wrong day,” said Wolfgang Bosbach, deputy leader of Merkel’s Christian Democrats in the lower house of parliament.

Candidates only need the most votes to win the third round, rather than the absolute majority required in the first two. That should be a formality because Merkel’s centre-right coalition nominally has 644 seats in the 1,244-seat assembly.

But the centre-left’s candidate, popular civil rights activist and Protestant Pastor Joachim Gauck, 70, has strong cross-party appeal. A non-partisan figure, he stood up to the communist regime in former East Germany and from 1990 to 2000 ran a commission investigating the Stasi secret police.

BERLIN, June 28 (Reuters) – Chancellor Angela Merkel faces a major test of her leadership this week when she tries to get her government’s candidate elected president in a vote usually deemed a procedural sideshow in German politics.

Wednesday’s election has become a litmus test of Merkel’s authority as her coalition stumbles lower and lower in opinion polls and her personal ratings hit rock bottom just as Europe looks for strong leadership to pull back from economic crisis.

“This is a test of whether the chancellor is able to pull her troops together,” said Roland Sturm, a political scientist at the University of Erlangen-Nuremberg. “There is a sense of Doomsday being put about by the commentators in Germany.”

A 1,244-strong federal assembly, made up of parliamentarians and regional delegates including actors, pop stars and sporting personalities, will vote whether to elect Merkel’s conservative candidate, Lower Saxony state premier Christian Wulff, or the centre-left opposition nominee, Protestant pastor Joachim Gauck.

Even though Gauck is more popular with the public, Wulff’s election should be a formality thanks to the absolute majority Merkel’s centre-right coalition holds in the assembly, as well as the far left’s antipathy towards the pastor.

But the media says the chancellor’s position is in jeopardy because Gauck’s fame as a civil rights activist in former East Germany has endeared him to many inside her camp.

The future of her vice-Chancellor Guido Westerwelle, head of the pro-business Free Democrats (FDP), may also hinge on the outcome of the secret ballot, with sections of the embattled party already in open revolt against their leader.

BERLIN (Reuters) – Germany longs for credible leaders again because of the mistrust politicians have sown, according to the man who could cost Chancellor Angela Merkel her job if he is elected president this month.

Joachim Gauck, a 70-year-old Protestant pastor standing as the main opposition candidate for head of state, said on Wednesday the German people were searching for someone dependable who could articulate their concerns.

“(Voters) want credible people at the top of politics, people they can trust,” Gauck told Berlin’s foreign press association. “They’ve now had so many reasons for mistrust that they could use someone again who could (restore trust).”

“That may be at the heart of what people expect of me and where I can have an influence.”

Many analysts say a Gauck victory on June 30 may spell the end of Merkel’s five-year chancellorship, and possibly the government, just as Germany struggles to help Europe out of a debt crisis that is threatening the euro currency.

He is taking on the government’s candidate, career politician Christian Wulff, in a run-off that is increasingly viewed as a referendum on Merkel’s centre-right coalition, whose popularity has slumped to its lowest ebb.

Support for the chancellor herself is also at a record low. An Infratest dimap survey showed only 12 percent of Germans are content with her coalition of Christian Democrats (CDU), Christian Social Union (CSU) and Free Democrats (FDP).

BERLIN (Reuters) – Germany and France on Monday moved to mend fences on policy splits, agreeing the European Union needs economic governance by all 27 member states, not just euro zone nations, as Paris had previously proposed.

Meeting in Berlin, Chancellor Angela Merkel and President Nicolas Sarkozy stressed their desire to speak with one voice in Europe, pledging to tighten policy coordination and improve budget discipline to contain an ongoing debt crisis.

“More than ever, Germany and France are determined to talk with one voice, to adopt common policies, to give Europe the means to met its legitimate ambitions,” Sarkozy told reporters at a joint news conference with Merkel.

“So (we will have) economic governance at the level of the 27 (member states) and in the event of necessity, there’ll be meetings concerning euro problems within the euro zone.”

The EU must convince financial markets the bloc has a common response to the worst crisis to hit the 16-country euro zone since the single currency was created 11 years ago and can prevent Greece’s debt problems spreading to other countries.

Paris and Berlin had been at loggerheads over how to approach to closer economic governance, and the two postponed talks initially scheduled for last week for fear they would be unable to reach an agreement, a French government source said.

Merkel stressed that government by the 27 was particularly important to her and that measures aimed at punishing budgetary sinners in the euro zone needed to be ramped up.