Confidence among German analysts and investors fell to a 10-month low in May on worries about soaring oil prices, rising interest rates and weak domestic demand, a survey showed yesterday.
The Mannheim-based ZEW Institute said its expectations indicator for Germany dropped for a fifth month to 46.4 from 49.7 in April, confounding economists' predictions of a confidence fall to only 49.0.
The monthly ZEW survey provides a pointer to next Tuesday's closely-watched Ifo business climate index, based on a survey of some 7,000 companies.
In April, the Ifo index rose unexpectedly, bolstering predictions of a mild recovery.
"Ifo will show whether business sentiment has improved further in an environment of buoyant demand from abroad and slightly better price competitiveness, or whether the rise in oil prices is already leaving its mark on the mood in the corporate sector," said Commerzbank economist Mr Ralph Solveen.
However, Mr Klaus Baader at Lehman Brothers in London questioned the usefulness of the ZEW poll. He said it had been a "poor guide" to trends in other business confidence surveys, which have all improved in recent months.
A separate ZEW gauge of current economic conditions also fell by 3.4 points in May, but would have fallen even more but for better-than-expected data for German gross domestic product (GDP) announced last Thursday half-way through polling.
