(Adds detail, economist quote, context)
By Paul Carrel and Andreas Framke
MANNHEIM, Germany, July 15 German analyst and
investor morale dropped in July for a seventh straight month to
its lowest level since December 2012, a leading survey showed on
Tuesday, suggesting the third quarter got off to a shaky start
for Europe's biggest economy.
Mannheim-based think tank ZEW's monthly survey of economic
sentiment fell to 27.1 in July, missing the consensus forecast
in a Reuters poll for a reading of 28.0 as political risk in the
Middle East weighed on the mood.
The data sent the euro down to a session low against the
dollar, helped Bund futures extend gains and caused Germany's
DAX index to weaken slightly.
"July's fall in German ZEW investor sentiment adds to signs
of a slowdown in the euro-zone's largest and strongest economy,"
said Jennifer McKeown, senior European economist at Capital
"The expectations index has been a reasonable indicator of
turning points in the economic cycle in the past and its
deterioration is another warning not to expect too much from the
The German economy grew by 0.8 percent in the first quarter,
it strongest rate in three years, but that was largely due to
mild weather boosting construction work so a slowdown is widely
expected in the second quarter before picking up in the third.
Recent data from Germany has been subdued, with exports,
imports, industrial orders, output and retail sales all falling
in May compared with a month earlier. Business sentiment has
also taken a turn for the worse.
ZEW President Clemens Fuest said Germany's economic activity
had experienced "a slight dent" recently and the decline in the
sentiment indicator mirrored "this sobering development".
But he added: "On a general note, however, the medium-term
economic outlook remains favourable,"
The government has forecast 1.8 percent growth this year,
driven by domestic demand.
A separate gauge of current conditions decreased to 61.8
from 67.7 in June, undershooting the consensus forecast for a
reading of 67.0. That was its lowest reading since April.
The index was based on a survey of 238 analysts and
investors conducted between June 30 and July 14, ZEW said.
(Writing by Michelle Martin; Editing by Stephen Brown)