German investor confidence decreases again

[February 04, 2010]  FRANKFURT (AP) -- German investor confidence dipped for a fourth straight month in January amid expectations that Europe's biggest economy will recover only slowly from recession, a closely watched survey found Tuesday.

The ZEW Institute's confidence index, which measures investors' outlook for the next six months, slipped to 47.2 points from 50.4 points in December.

Despite the 3.2 point decline, ZEW said the index remains well above the historical average of 27.1 points. The index hit a 3 1/2-year high of 57.7 points in September.

"The assessment of the financial market experts suggests that we will see an economic recovery in 2010 at best, but not a clear economic upswing. The way out of the recession is burdensome and long," ZEW President Wolfgang Franz said in the report.

The ZEW said surveyed participants expected consumer product and automobile markets to develop negatively in the next six months, while expectations for the German machinery sector improved considerably in January.

The ZEW said economic expectations in the 16 countries that share the euro currency fell to 46.4 points in January from 48 points in December.

Europe has been hit by concerns about the debt problems of some of its weaker members -- particularly Greece and Ireland. The rapid rise in these countries' budget deficits suggests they will face tough fiscal measures, such as spending cutbacks and higher taxes, that would limit growth in coming years.

However, Jean-Claude Juncker, the euro zone's top official, on Monday said he was sure that Greece "will be able to re-establish balance (to its public finances) within a reasonable time."

Analysts also said there was reason to be optimistic.

"The correction of the ZEW indicator is no reason to worry as it is still comfortably high," Carsten Brzeski, an ING analyst in Brussels, said.

"The initial enthusiasm after the end of the recession last year has made way for more realism. The German economy is now entering calmer waters. Several leading indicators have already returned to their pre-crisis levels. Now it is up to the real economy to make these expectations come true," Brzeski said.

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[Associated Press; By GEORGE FREY]

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