German Investor Confidence Drops as Greece Clouds Outlook

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German investor confidence fell for a third month as the risk of a Greek debt default stoked uncertainty in Europe’s largest economy.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, slid to 31.5 in June from 41.9 in May. That’s the lowest level since November. Economists had forecast a decline to 37.3, according to the median of 36 estimates in a Bloomberg survey.

While the Bundesbank has raised its economic forecasts for Germany amid increasing consumer optimism, the euro area is blighted by Greece’s failure to reach a deal with creditors to unlock bailout funds. Figures published Tuesday showed European car sales rose at the slowest pace in six months in May.

“External factors are reducing the scope for further improvement of Germany’s good economic situation,” said ZEW President Clemens Fuest in a statement. “These include, in particular, the ongoing uncertainty over Greece’s future and the restrained dynamic of the global economy.”

A measure of the current situation in Germany slid to 62.9 in June from 65.7, ZEW’s report showed. A gauge of expectations for the euro area dropped to 53.7 from 61.2.

Greek Talks

The DAX Index of German stocks was down 1 percent at 10,872 at 11:09 a.m. Frankfurt time. The euro fell 0.1 percent to $1.127.

As euro-area finance ministers prepare to meet in Luxembourg this week, Greek Finance Minister Yanis Varoufakis has signaled his country won’t submit a new reform plan. He told Bild newspaper that any new proposals would need to be thrashed out at a lower level before they could be presented.

The country needs to seal an accord or get an extension before its bailout expires on June 30, or risk missing payments on its debt of about 313 billion euros ($353 billion).

The Bundesbank boosted its German economic-growth outlook on June 5, forecasting an expansion of 1.7 percent in 2015 compared with the 1 percent it predicted in December. In its monthly bulletin published this week, the Frankfurt-based central bank said the “extraordinarily positive” consumer climate remains the main driver of economic expansion while manufacturing “could soon shift into a higher gear.”

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