Investor sentiment in Germany fell unexpectedly to its lowest level in nearly eight years in September, a survey showed today.
The ZEW economic institute said its economic expectations indicator for Germany, based on a survey of 307 analysts and institutional investors, fell to -22.2 from -5.6 in August.
September's index was the lowest since January 1999 and well below the mid-range forecast in a Reuters poll of 46 economists last week for a reading of -7.8.
"The drop of world demand as a result of the expected slowdown of the US economy is likely to negatively affect German exports," ZEW said.
The euro fell to its lows of the day against the US dollar on the report and Germany's DAX index slipped 0.5 per cent, while Bunds surged.
In August, the ZEW expectations indicator plunged to its lowest level in over five years. But the fall was not backed up by the Ifo institute's closely watched business climate index, which remained unexpectedly buoyant in the month.
A separate ZEW gauge of current conditions for Germany rose in September to 38.9 from 33.6 in August, above a consensus for 35.
Analysts widely expect German economic growth to slow sharply next year, partly because a planned rise in value-added tax from January 1st, 2007, could hit consumer spending. They also see export growth slowing due to a weakening global economy.