Optimism was already building among economists on German and euro zone growth in a Reuters poll taken just before key political parties in Germany agreed a historic deal on debt, suggesting bigger revisions to forecasts in coming days.

Euro zone bond yields climbed as Germany's incoming chancellor Friedrich Merz struck a deal with the Greens and Social Democrats to boost state spending and revise debt rules. Germany's benchmark 10-year bond yield rose sharply,

Germany’s next chancellor, Friedrich Merz, struck a deal to loosen borrowing limits, unleashing €500 billion for defence and infrastructure. Markets surged, while analysts debated its impact on inflation and ECB rate policy.