A closely watched indicator of German economic expectations fell again in December, although at a slower pace than in the previous month. The ZEW institute's indicator of economic sentiment fell by 3.6 points in December from November to plus 0.6, after falling by 19.2 points the month earlier. The fall was less sharp than the expected drop to minus 2.0, but it still leaves the index at a 16-month low. The euro declined following the publication of the index, dropping to USD1.0093 against the dollar, from USD1.0129 earlier. ZEW president Wolfgang Franz said the slight stock market recovery and the European Central Bank interest rate cut had a positive effect on the indicator and that the decline largely reflected the uncertainty about Germany's politico-economic situation and increased geopolitical risks. "The tone of the financial markets remains flat and the danger of recession has not vanished yet," he added.
The index for the overall economic situation in Germany fell 1.3 points to minus 95.4 in, the institute said. The eurozone expectations index rose 2.9 points in December to plus 27.1, while the situation indicator was down 1.1 points to minus 76.7 //www.fxcentre.com