German investor optimism fell more than expected in February as analysts said the strength of the euro was threatening to erode company profits.
The ZEW economic institute said its monthly gauge of institutional investor and analyst expectations fell to 69.9, the lowest since November and the second consecutive decline, from 72.9 in January. Economists polled by Reuters had expected a drop to 72.7.
Germany has relied heavily on surging demand from abroad to help it shake off three years of stagnation as a global recovery accelerates. Consumer spending, which accounts for more than half the economy, remains weak.
The euro has gained more than 20 per cent against the dollar in the past year and reached an all-time high in January close to $1.29.
A stronger euro erodes exporters' competitiveness by making goods produced in the single currency region more expensive for customers outside the 12-nation bloc.
Doubts among analysts about German Chancellor Gerhard Schroeder's ability to push forward the reform process helped to dampen optimism in February, the ZEW said.
The ZEW's expectations indicator for Germany peaked at 89.6 in January 2000. The all-time low was minus 62.2 in December 1992.
The current situation component has been in negative territory since May 2001, reflecting three years of stagnation in Europe's biggest economy.