German investor confidence rose unexpectedly for the second straight month amid hopes that the euro will back off all-time highs and that the worst of the financial market crisis may soon be over, a closely watched survey showed Tuesday. The ZEW institute said its monthly index rose to minus 32 points this month from minus 39.5 in February. The survey measures investors' expectations for the German economy, Europe's biggest, over the next six months. Economists surveyed by Dow Jones Newswires had predicted that the index would slip to minus 40. Financial markets' assessment of Germany's current economic situation has darkened, and a subindex measuring that dropped to 32.1 points this month from 33.7, ZEW said. However, they “expect growth dynamics to revive from September 2008.” “In particular, the experts are more optimistic for the growth of the US economy in the next six months,” the institute added. “Moreover, they expect the US dollar to appreciate versus the euro” - benefiting German exports, which have been a key element of the country's economic recovery. “The optimism of the financial analysts is presumably based on the hope that the peak of the financial market crisis will be overcome in half a year and that business dynamics will not weaken more strongly than expected to date,” ZEW president Wolfgang Franz said in a statement. The 15-nation euro has hit a string of new records against the dollar this month. It has been powered by the contrast between the European Central Bank's tough anti-inflation stance and the US Federal Reserve's willingness to slash interest rates amid the subprime lending crisis and resulting market volatility. Tuesday's stronger-than-expected ZEW reading helped propel the currency to a new high of nearly $1.55. European industry groups and labor unions want quick ECB rate cuts to tame the euro - worried that as it rises, Europeans will lose orders to US and Japanese competitors. However, government figures showed that German exports were up a healthy 9 percent in January over the previous year. Economist Andreas Rees at UniCredit in Munich cautioned against reading too much into Tuesday's improved ZEW reading, and said he expects another key indicator - the Ifo index of business confidence - to suffer a setback this month, given the euro's high level. “In the previous months, economists and asset managers alike had already priced in a deep recession in Germany and hence a lot of pessimism and conceivable doomsday scenarios,” he wrote in a research note. “Now, economists have become somewhat less gloomy.” __
