Aug. 21 (Bloomberg) -- The global fallout from the U.S. subprime mortgage crisis won't dent economic growth in Germany, according to Finance Minister Peer Steinbrueck, who said the country's financial sector can absorb the shock.

``We have no reason to believe that the consequences of the crisis that has been caused by the U.S. mortgage sector will spill over to Germany and the European Union,'' Steinbrueck told reporters in Berlin today. ``As far as we can see, there is no spillover effect into the real economy.''

German banks have the situation ``under control,'' Steinbrueck said, adding management of the situation ``in the past three-to-four weeks has worked well'' and that there are no signs of more banks being in trouble.

The highest default rate in a decade on U.S. subprime mortgages has spilled into credit markets and prompted central banks around the world to inject more than $350 billion of emergency funds into the financial system to smooth lending between banks.

Leipzig-based Landesbank Sachsen Girozentrale and IKB Deutsche Industriebank AG, both state-controlled banks, have received emergency funding after a liquidity shortage prevented finance units from selling commercial paper, debt due in 270 days or less.

Investor confidence, hit by subprime woes, fell to the lowest in eight months in August, the ZEW Center for European Economic Research said today.

Juergen Pfister, chief economist at Bayerische Landesbank, said the ZEW figures mirror the stock market trend and predicted economic growth will accelerate in the second half of the year.

`Lot of Turbulence'

``So far we've seen a lot of turbulence in financial markets, but little, if any, evidence of a spillover into the real economy,'' Pfister said. ``I don't expect much to change.''

German ministers and economic institutes including the Berlin-based DIW have said there are no signs that German production, hiring and spending are being affected.

The DIW said on Aug. 15 that there's ``no reason to assume'' that there may be ``serious dangers'' for the German economy from the subprime crisis. The institute expects the German economy to expand 0.4 percent in the third quarter, faster than the 0.3 percent growth in the prior three months.

German stocks recovered, led by Bayer AG, Henkel KGaA and Volkswagen AG, after falling earlier today on renewed concern that the mortgage rout is spreading. The benchmark DAX Index gained 43.24, or 0.6 percent, to 7,450.77 at 2:07 p.m. in Frankfurt.

To contact the reporter on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net.

Last Updated: August 21, 2007 09:51 EDT