A broader batch of country PMIs this week are expected to confirm improving economic conditions in the euro area, consistent with solid GDP growth in Q1. However, both France and Spain are expected to remain just below the 50 mark, suggesting that the recovery is still uneven and fragile. Later in the week, we expect German factory orders and industrial production to confirm the positive sentiment in Germany. MARKET ISSUES: The recent string of positive data in Europe may well lead to higher growth forecasts in the coming months. However, we would caution against excessive optimism, as only Germany has the conditions for a full cyclical recovery.