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Weaker euro buoys German investor morale in face of Paris attacks

Published 17/11/2015, 10:56
© Reuters.  Weaker euro buoys German investor morale in face of Paris attacks

BERLIN (Reuters) - Morale among German analysts and investors rose in November, a closely watched survey showed on Tuesday, snapping a seven-month run of falls despite Friday's attacks in Paris, which the poll partly took account of.

The ZEW think tank surveyed 225 analysts and investors, 40 of whom replied to the poll after Friday night's suicide bombings and shootings in Paris that killed 129.

Mannheim-based ZEW said its monthly survey showed economic sentiment in Europe's largest economy rising to 10.4 points in November from 1.9 in October. That was above the consensus forecast for a reading of 6.0 based based on a poll conducted before the Paris attacks.

"The hope for new ECB action in December and consequently a weaker euro have clearly improved investors' optimism," said ING economist Carsten Brzeski.

Last week, ECB President Mario Draghi underlined the bank's readiness to extend money printing, warning that a key measure of economic health - price inflation - was flagging. ECB policymakers' next key meeting is on Dec. 3.

"The outlook for the German economy is brightening towards the end of the year. Economic pessimism appears not to have increased after the terror attacks in Paris," ZEW chief Clemens Fuest said in a statement.

"The currently high level of consumption in Germany, the recent decline in the external value of the euro, and the ongoing recovery in the United States are likely to bolster the robust development of the German economy," he added.

A separate gauge tracking current conditions dipped to 54.4 points from 55.2 points in October. The Reuters poll had pointed to a reading of 55.0.

German economic growth slowed slightly to 0.3 percent on the quarter in the July-September period, with foreign trade a drag as a reliance on exports exposes it to a slowdown in emerging markets.

Recent data has painted a mixed picture of the German economy. While exports and imports bounced back in September, industrial output posted its steepest drop in more than a year in that month.

In addition, factory orders fell for three consecutive months between July and September, the first such run since summer 2011, reinforcing concerns that the slowdown in emerging markets will leave its mark.

Still, the government expects strong private consumption and higher state spending on refugees to drive economic growth to 1.7 percent this year and 1.8 percent next.

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