German investor confidence hit a five-month high in August amid hopes of an end to the eurozone recession, a closely watched survey released Tuesday showed.
The Mannheim-based ZEW economic research institute said its index gauging the mood among analysts and institutional investors in Europe's biggest economy climbed to 42 points this month from 36.3 points in July.
Economists had expected a more modest rise to 39.9 in the indicator, which points to economic developments six months down the track.
"The first signs of an end to the recession in important eurozone countries may have contributed to the indicator's rise," the institute said, adding that the economic optimism is supported by the robust domestic demand in Germany.
The ZEW survey recorded a strong rise in economic expectations for the eurozone ahead of data that is to be released Wednesday that economists expected to show the 17-member currency bloc emerged from a prolonged recession during the second quarter.
The ZEW survey showed analysts' assessment of Germany's current economic conditions also improved in August with the respective indicator climbing 7.7 points to 18.3 points.
Based on a survey of 262 analysts, the ZEW index now stands at its highest level since March.
At the same time, the statistics office said annual inflation in Germany crept up to 1.9 per cent in July on higher food prices.
The rise compared with 1.8 per cent in June. The data confirmed the statistic's office preliminary estimate released last month.
The European Central Bank has set an annual target for inflation in the 17-member eurozone at below but close to 2 per cent.
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