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German investor sentiment falls less than expected in October

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German investor sentiment falls less than expected in October
FILE PHOTO: The skyline with its banking district is photographed in Frankfurt, Germany, August 13, 2019. REUTERS/Kai Pfaffenbach   -   Copyright  KAI PFAFFENBACH(Reuters)
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BERLIN (Reuters) – The mood among German investors worsened less in October than analysts had expected, a survey showed on Tuesday, amid concern that Europe’s biggest economy might be headed for a recession.

In its monthly survey, ZEW said that an index showing economic sentiment among investors fell to -22.8 points in October from -22.5 points in the previous month. A second index, measuring investors’ assessment of the economy’s current shape, fell to -25.3 from -19.9 points.

“The recent settlement in the trade dispute between the USA and China does not seem to diminish economic scepticism at this stage,” ZEW President Achim Wambach was quoted as saying.

U.S. President Donald Trump last week outlined the first phase of a deal to end a trade war with China and suspended a threatened increase in tariffs, but officials on both sides said more work needed to be done before an accord could be reached.

The trade conflict between the United States and China, along with other factors such as uncertainty surrounding Brexit, has dragged Germany’s export-oriented industry into a recession, sparking fears that the negative trend could spill over to the rest of the economy.

ZEW’s headline economic sentiment index, which reached its lowest in almost seven years in August, appears to have stabilised. But the investor assessment of the German economy’s current condition in October was as pessimistic as it was in 2010.

The economy ministry said on Monday that Germany was unlikely to slide into a prolonged recession, but the economy was stuck in stagnation.

Chancellor Angela Merkel’s coalition government of conservatives and social democrats has resisted calls for a stimulus package to counter the slowdown.

Germany’s leading economic institutes have cut their growth forecasts, predicting an expansion of 0.5% this year and 1.1% in 2020.

The government will publish its growth forecasts, which often follow the institutes’ estimates, this week.

(Reporting by Tassilo Hummel; editing by Thomas Escritt, Larry King)

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