CEOs more confident in Q4, see more M

LONDON, Nov 2 (Reuters) Company bosses are more confident about the global business outlook than they were in the gloomy third quarter, and a rising number see even more mergers and acquisitions ahead, a survey of chief executives showed on Thursday.

The latest quarterly poll of chief executives in the United States and Europe, conducted by investment firm Goldman Sachs, showed some of the biggest gains in optimism in the survey's four-year history.

Sharp declines in equity markets worldwide in May and June had sent a shiver through boardrooms that was reflected in the survey's downbeat third-quarter responses, Goldman said.

''Three months on, CEOs in both the U.S. and Europe appear to have put their worries behind them,'' the investment bank's analysts said.

''Although the mood is not exactly exuberant, it is certainly more solid than it was over the summer, with those saying conditions are improving outweighing those who think they are deteriorating by three to one.'' A global index measuring the overall business outlook rose to 64 in the fourth quarter from 42 in the three months to September and 56 in final quarter of 2005.

Although down from heady readings of 71 recorded in the first two quarters of this year, the index is now back above the average, 62, of all the survey's quarterly readings since 2002.

A reading above 50 shows there are more respondents that are optimistic than those who are negative about the outlook.

The U.S. readings on the global business outlook surged to 65 from 39, and the European index jumped to 64 from 43.

''The measured optimism that we see among CEOs supports our view that business investment will help to cushion the impact of consumer slowdown and prevent it from blossoming into a full-fledged recession,'' the Goldman Sachs report said.

M&A STILL BUZZING A separate question on how corporate chiefs feel about ''overall consolidation'', or expectations about future mergers and acquisitions, saw the resulting index rising to 76 from 62 in the third quarter.

Although that reading was still down from the 80 recorded at the end of last year, it was above the survey average of 72, and the growing M&A buzz over the past three months was reflected on both sides of the Atlantic.

''Our index indicates that expectations for M&A have risen further, despite already high levels of activity this year,'' the report said. ''The focus is on strategic rather than opportunistic transactions. M&A continues to be of interest, but the bar is high.'' Europeans report a very strong focus on transnational deals, while U.S. firms, as is usual, appear far more interested in domestic transactions.

The survey also showed CEOs more upbeat on capital investment in existing operations, and the global index compiled from those responses rose to 74 from 69 in the third quarter.

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