German financial sector confidence hits bumps: ZEW

FRANKFURT (AFP) – German investor sentiment slumped again in November, the ZEW economic research institute said on Tuesday, signalling that a sharp recovery in Europe's biggest economy could be running out of steam.

ZEW's monthly barometer of financial experts fell to an indexed 51.1 points after already edging lower to 56.0 points in October, an institute statement said.

Analysts polled by Dow Jones Newswires had forecast it would dip to 54 points this time around.

"The upward trend of the economic expectations is interrupted for the time being. The surveyed financial market experts signal that they do not count on a strong boost for economic growth in the next year," ZEW president Wolfgang Franz was quoted as saying.

The index nonetheless remained well above its historical average of 26.9 points.

An assessment by investors of the current situation improved in November by 6.6 points to minus 65.6 points meanwhile, the sixth consecutive rise and the highest level since January, ING senior economist Carsten Brzeski noted.

Several analysts pointed to recent falls in share prices as a factor in the headline figure's decrease, as the DAX index of German bluechips is now about 1.6 percent lower than a month ago.

"The German economy is about to enter calmer waters," Brzeski said after recent data from Europe's biggest economy showed that industrial production and foreign trade have replaced car-driven private consumption as growth engines.

"Earlier enthusiasm is now gradually giving way to realism," he added.

In Berlin, German Chancellor Angela Merkel said on Tuesday in her first major policy speech since being reelected in September that "the problems are going to get bigger before the situation improves."

Economist Martin Lueck at UBS said Germany's "V-shaped rebound will likely run out of steam over the next few months, and the economy will embark on a bumpier and less dynamic recovery path thereafter."

Commerzbank's Simon Junker noted that "the ZEW index has given a good prediction of the turning point in economic momentum in the past," while for Andreas Rees at UniCredit: "There can be little - if any - doubt that the ZEW growth expectations passed their peak."