UPDATE 1-German March industry orders tumble 2.8 pct as Ukraine weighs

Wed May 7, 2014 2:41am EDT

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By Madeline Chambers

BERLIN May 7 (Reuters) - German industry orders fell 2.8 in March from the previous month, the biggest drop in 1-1/2 years as demand for German capital and consumer goods from the eurozone slumped due partly to worries about the Ukraine crisis, data showed on Wednesday.

The surprise slide compares with the consensus forecast in a Reuters poll for a 0.3 percent rise.

"Overall the trend for industry orders remains upwards but it may weaken somewhat," the Economy Ministry said in a statement, adding that contracts in the first quarter were roughly stable compared to the fourth quarter of last year.

"Geopolitical events could contribute to temporary caution in order activity...," said the ministry, adding that a delay in production due to a mild winter may also have an effect.

Orders for industrial goods from abroad fell by 4.6 percent while domestic orders were down 0.6 percent.

Germany's export-oriented industry struggled to gain traction last year against the backdrop of a weak global economy but picked up towards the end of 2013.

Europe's biggest economy powered through the early years of the euro zone crisis but weakened towards the end of 2012 and start of 2013.

After growth of just 0.4 percent last year, the government has predicted expansion of 1.8 percent this year, driven by domestic demand.

Industry orders from euro zone countries slumped by 9.4 percent with demand for capital goods from that region down 13.9 percent and for consumer goods down 13.3 percent.

Some economists were worried by the sharp drop from the single currency zone.

"The West's conflict with Russia may be unsettling companies in Europe more than previously thought," said Thomas Gitzel, chief economist at VP Bank.

"It is quite conceivable that the recovery in Germany and in the euro zone loses momentum in the second half of the year," he said. (Additional reporting by Stephen Brown)

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