By Shamim Adam and Shobhana Chandra Nov. 11 (Bloomberg) -- Confidence in the world economy dipped in November as central banks’ actions to withdraw some stimulus measures sparked concern about the strength of the recovery, a Bloomberg survey of users on six continents showed. The Bloomberg Professional Global Confidence Index fell to 60.3 from 61.7 in October, the highest level in the series that began two years ago. The index exceeded 50 for a fourth month, which means there were more optimists than pessimists. The survey follows steps by central banks including the Federal Reserve to start unwinding emergency measures, seeking to avoid market distortions that may spur bubbles in assets from stocks and commodities to real estate. The shift comes at a time when unemployment is still rising in the U.S. and Europe, threatening a nascent recovery as consumers limit spending. “Confidence hinges almost entirely on the level of stability produced by extraordinary monetary support,” said Lena Komileva, an economist at Tullett Prebon Plc in London who participated in the survey. “As the effect of fiscal stimulus peaks, the future path of growth figures will become more volatile and that will affect confidence.” The survey of more than 1,500 Bloomberg users was conducted between Nov. 2 and Nov. 6. Since the previous survey, the U.S. jobless rate surpassed 10 percent for the first time since 1983, threatening to hurt household spending in the world’s largest economy. American gross domestic product rose at an annual 3.5 percent in the third quarter, signaling the start of a recovery from the deepest recession since the 1930s. Liquidity Injections Policy makers’ record injections of liquidity have stirred some concern that inflation will climb. European Central Bank President Jean-Claude Trichet said this month that the bank will withdraw some liquidity operations, while the Bank of England slowed the pace of bond purchases. Australia and Norway have started increasing borrowing costs, and the Fed this month indicated the circumstances in which it would be prepared to raise rates. The Group of 20 nations last week outlined a timetable to rebalance the global economy, mapping exit strategies from the stimulus. A measure of U.S. participants’ confidence in the world’s largest economy fell to 46.9, the lowest reading since July, from 48.8, the survey showed. “The unemployment rate is going to continue to rise and it’ll take a big chunk out of consumer spending,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York and a regular survey participant. “People are concerned growth in the U.S. is likely to be a two-quarter phenomenon as the fiscal stimulus will burn itself out.” Europe’s Gauge The confidence gauge for western Europe rose to 47.7 from 44 last month. Germany’s index rose to 62.5 from 50 as the government, which is spending 85 billion euros ($127 billion) to stimulate growth, last month raised its outlook for the economy, forecasting an expansion of about 1.2 percent in 2010 after a 5 percent contraction this year. Bloomberg users in Spain remained the most pessimistic in Europe as that nation stayed mired in recession, with unemployment soaring toward 20 percent and the economy struggling to recover from a construction-industry collapse. The Spain confidence index was 17.7 this month from 10 in October. “We’ve turned the corner but the global economy isn’t really soaring,” said David Semmens, an economist at Standard Chartered Bank in New York, and a regular survey participant. “Businesses and consumers are still quite cautious. You’re not seeing the rebound you saw in earlier recoveries after a recession.” Latin America Confidence dropped in the South American region this month, with its index falling to 66.5 from 72.9 in October. In Brazil, the region’s biggest economy, the confidence index fell to 86 from 88.3 last month. Sentiment fell the most in Japan, where bond yields are rising on concern government pledges to support households will exacerbate what is already the largest debt burden in the industrialized world. The gauge declined to 29.9 from 38.8, the biggest drop among country indices in the survey. Asia’s index dipped to 75.6 from 76.2. Fewer respondents expect the U.S. dollar to weaken further in the next six months against the world’s most actively traded currencies. The trade-weighted Dollar Index has fallen 7.7 percent this year. The dollar confidence index rose to 42.4 from 31.2 in October. Biggest Decline Users in Japan are less optimistic about the yen’s appreciation against the dollar, with the index falling for a second month to 53 from 56.9. Respondents in western Europe were divided on the direction of the euro against its U.S. counterpart. Bloomberg users were mixed on the outlook for their equity markets in the next six months. Respondents in the U.S., Japan and the U.K. expect shares to decline, while those in Mexico, Germany and Italy predict their markets will extend their advances. Survey participants in the U.S., Europe and Latin America also remained confident short-term interest rates will rise in the next six months, the survey showed. To contact the reporters on this story: Shamim Adam in Singapore at sadam2@bloomberg.net; Shobhana Chandra in Washington schandra1@bloomberg.net

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