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November 11, 2009

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German investor hopes slide

GERMAN investor confidence so far in November has fallen from the previous month, a leading survey showed yesterday, reflecting doubts about the sustainability of economic recovery.

The ZEW survey, which tracks views of Germany, Europe's largest economy, dropped 4.9 points and now stands at 51.1.

Despite the decline, which follows a 1.7-point monthly dip in October, the index is still well above its historical average of 26.9 points.

The ZEW, based in Mannheim and also known as the Center for European Economic Research, said the assessment of the current economic situation in Germany improved by 6.6 points to minus 65.6 in November.

Economic expectations for Germany are still high, although financial experts became slightly less confident and were still uncertain over how the economy will progress.

The ZEW said there were concerns about the labor market and its impact on consumer spending.

However, the survey showed continued improvement in German exports was feeding optimism for recovery.

On Monday, official data showed German exports rose 3.8 percent in the month compared with September. Still, exports remained 18.8 percent below the levels of a year earlier, the Federal Statistical Office said.

"The upward trend of economic expectations is interrupted for the time being," Wolfgang Franz, ZEW's president, said in the report.

"The surveyed financial market experts signal that they do not count on a strong boost for economic growth in the next year. It rather seems that economic recovery will proceed in small steps."

The indicator for the current economic situation in the 16 countries that share the euro currency improved by 5.1 points and now stands at minus 70.3, while the economic expectations for the euro zone decreased by 5.1 points to 51.8 in November.

The German economy returned to modest growth in the second quarter following a deep recession.

In a separate report yesterday, the FSO said German October consumer prices rose 1 percent from September while they remained unchanged compared with a year ago.

Energy prices led the decline, falling 7 percent overall from a year ago.


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