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German investor morale darkens on trade disputes, Iran tensions


By Michael Nienaber

BERLIN (Reuters) - The mood among German investors deteriorated more sharply than expected in July, a survey showed on Tuesday, with the ZEW institute pointing to the unresolved trade dispute between China and the United States as well as political tensions with Iran.

ZEW said its monthly survey showed economic sentiment among investors fell to -24.5 from -21.1 in June. Economists had expected a less severe drop to -22.3.

A separate gauge measuring investors' assessment of the economy's current conditions plunged to -1.1, the lowest level since June 2010.

The weak reading bodes ill for the German economy which is expected to post only meager growth of 0.5 percent this year.

ZEW President Achim Wambach said the pessimism among German investors was probably driven by the continued slide in incoming orders for German industry.

German industrial orders fell far more than expected in May, data released earlier this month showed, with the government warning manufacturing would remain weak in the coming months.

"A lasting containment of the factors that are causing uncertainty in the export-oriented sectors of the German economy is currently not in sight," Wambach said.

"The Iran conflict seems to be intensifying and the ongoing trade dispute between the United States and China is a burden not only for Chinese economic development."

Wambach also pointed to business uncertainty caused by the potential for Britain to leave the European Union in late October without a divorce deal.

(Reporting by Michael Nienaber)

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