* Sentiment reading rises far more than expected
* Possible Brexit delay, progress on U.S.-Sino trade talks help
* But ZEW still sees weak German growth in H1
* Germany narrowly avoided recession in late 2018 (Adds background)
BERLIN, March 19 (Reuters) - The mood among German investors improved by much more than expected in March, a survey by the ZEW research institute showed on Tuesday, as a potential delay to Britain’s departure from the European Union buoyed sentiment.
British lawmakers voted overwhelmingly last Thursday to seek a delay in Britain’s exit from the EU.
“The possible delay in the Brexit process as well as the renewed hope for a deal on the UK’s withdrawal from the EU seem to have given rise to more optimism among financial market experts,” ZEW President Achim Wambach said in a statement.
“Progress made in the negotiations between China and the U.S. to end the trade war between the two nations may also have contributed,” he added.
The ZEW research institute said its monthly survey showed economic sentiment among investors rose to -3.6 from -13.4 in February. Economists had expected an increase to -11.0.
A separate gauge measuring investors’ assessment of the economy’s current conditions dipped to 11.1 from 15.0 in the previous month. Markets had predicted a fall to 11.7.
The stronger-than-expected ZEW reading bucked a recent run of weak data on the German economy, Europe’s largest, which stalled in the final quarter of last year, just skirting recession.
“Nevertheless, the ZEW Indicator of Economic Sentiment for Germany points to relatively weak growth in the first half of 2019,” Wambach added.
Figures released earlier this month showed industrial orders posted their biggest drop in seven months in January, a sign that the economy had a subdued start to 2019.
Many of the country’s traditionally export-focused companies have been hit hard by a cooling global economy and trade disputes triggered by U.S. President Donald Trump.
They also face taking a hit if Britain’s exit from the European Union is disorderly.
A panel of advisers to the German government on Tuesday cut its growth forecast for this year to 0.8 percent and warned risks related to Britain’s departure from the EU, trade disputes and a sharper than expected slowdown in China remained high.
Christoph Schmidt, one of the advisers, said: “The German economic boom is over but a recession is not currently expected due to the robust domestic economy.” (Writing by Paul Carrel Editing by Michelle Martin)