German investor confidence rises more than forecast

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Aug 19: German investor confidence increased more in August than economists forecast after the euro declined and oil prices retreated from a record.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations rose to minus 55.5 from minus 63.9 in July, the lowest since the survey began in 1991. Economists expected a gain to minus 62, the median of 43 forecasts in a Bloomberg News survey shows.

A 24% drop in oil prices from a July 11 record of $147.27 a barrel leaves companies with more money to spend just as a weaker euro underpins exports. Germany’s BGA trade association today maintained its 2008 forecast for economic growth. Still, the DAX benchmark share index has shed 20% this year. The report is ``providing a glimmer of hope that there is light at the end of the tunnel,’’ Martin van Vliet, an economist at ING Group in Amsterdam, said in an e-mailed note on Tuesday. ``We would caution against becoming overexcited about this. Investor confidence is still at recessionary levels.’’

The German economy may expand 1.7% this year before cooling to less than 1% in 2009, the BGA said. BGA chief said the economy is in a ‘‘corrective phase’’ after a ‘‘strong start.’’

‘‘We had two positive factors: the drop in oil prices and the depreciation of the euro,’’ Sandra Schmidt, an economist at ZEW, said in an interview with Bloomberg Television. It ‘‘should also have a positive influence on the indicator in the future.’’