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German Investor Confidence Unexpectedly Improves Amid Brexit, Trade Risks: ZEW


German investor confidence rose strongly in December, defying expectations for a modest weakening, but caution prevailed as financial analysts' assessment of the current economic situation again deteriorated sharply due to sluggish economic growth and uncertainties linked to global trade and Brexit.

The ZEW Indicator of Economic Sentiment for Germany rose 6.6 points to reach minus 17.5 points in December, results of a survey by the Centre for European Economic Research, or ZEW, showed on Tuesday.

Economists had forecast the index, which reflects analysts' economic expectations for the next 6 months, to worsen further to minus 25.

The survey was conducted among 201 analysts between November 26 and December 10.

Investor confidence improved for a second straight month after a sharp deterioration in October. The latest reading was the highest since September, when the score was -10.6.

Despite the strong gain, the ZEW indicator remained clearly in negative territory and well below the long-term average of 22.5 points, the Mannheim-based ZEW said.

The current conditions index of the survey fell by 12.9 points to a level of 45.3 points. Economists had expected a score of 55.

"Although the rise in economic expectations is a welcome one, it should not be over-interpreted," ZEW President Achim Wambach said.

Wambach said the significant deterioration in the assessment of the current economic situation, for both Germany and Eurozone, was indicative of relatively weak economic growth in the fourth quarter.

Further, uncertainties also remain in terms of the looming international trade dispute and Brexit, which have a particularly negative impact on private investment and Germany's exports, he added.

The investor confidence index for Eurozone rose by a point to minus 21 points, while the current conditions index fell further by 6.1 points to a level of 12.1 points.

The indicator reflecting the inflation expectations in the Eurozone dropped by 19.5 points to reach 6.0 points.

Results of the monthly survey by the behavioral research institute Sentix showed on Monday that Eurozone investor confidence sunk to its lowest level since 2014 in December. The index dropped to -0.3 from 8.8, marking the weakest level since December 2014.

The current conditions index of the Sentix survey hit the lowest level since January 2017 and the expectations index plummeted to the weakest level since August 2012.

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