German business confidence fell unexpectedly in March after two months of gains, according the closely watched Ifo survey. The Ifo economic institute said its West German business climate index fell to 88.1 in March from 88.9 in February, and was down from 91.4 in March last year. Economists had forecast the index to remain unchanged at 88.9. The decline came despite a rate cut by the European Central Bank - the second in four months - and German Chancellor Gerhard Schroeder's announcement of a E15bn investment package to help Europe's largest economy pull itself out of a slump.
The Ifo had risen in both January and February, hitting a seven-month high last month, but the institute and analysts had been doubtful that the gains would be sustained. "With these results, the indications of the past two months for a turnaround in the business climate for Germany have not yet been confirmed," said Hans-Werner Sinn, Ifo president. Sinn added that in the assessment of the current business situation, the decline was moderate, but that expectations for the next six months worsened considerably. The March business expectations index dropped to 97.2 from 98.4 in February. ///www.fxcentre.com