German investor confidence dipped to its weakest level in two years owing to the weak euro-area economic recovery and Ukraine crisis, which dampened business optimism.
The Mannheim-based ZEW Center for European Economic Research reported that its gauge of analyst and investor expectations, which gives a picture of economic conditions over the next six months, fell to 8.6 in August. This was the biggest decline in over two years and the eighth straight monthly drop. The measure stood at 27.1 in July, with analysts expecting it to decline to 17 in August.
The sanction wars between Russia and the West have affected Germany’s and euro-area outlook and threaten to drag recovery in the 18-nation bloc. Italy, the bloc’s third-biggest economy, has already slid back into recession.
An index of current conditions fell to 44.3 in August compared to 61.8 in July, reported ZEW. A measure of confidence for the euro zone fell to 23.7 from July’s reading of 48.1.
The euro fell after the data was released to trade at $1.3342 as of 12:29 p.m. in Frankfurt. The Germany’s DAX Index of shares slid 0.3 percent to 9,156, bringing its total drop to nearly 9 percent since July 3.
Economists in a Bloomberg News poll predict that Germany’s economy declined by 0.1 percent in the April-June quarter. Much of the decline is thought to be due to the unprecedented warm winter weather in the first quarter that boosted production in that period, causing the GDP to expand 0.8 percent. The Bundesbank estimates that Germany’s economy will expand by 1.9 percent in 2014. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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