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German investor morale falls as political risks cloud outlook

BERLIN (Reuters) - The mood among German investors deteriorated more than expected in February, a survey showed on Tuesday, as uncertainties about the outcome of Brexit talks and future U.S. trade policies cloud the growth outlook for Europe's biggest economy.

Mannheim-based ZEW said its monthly survey showed its economic sentiment index fell to 10.4 from 16.6 points in the previous month. This undershot the Reuters consensus forecast for a less pronounced drop to 15.0.

A separate gauge measuring investors' assessment of the economy's current conditions edged down to 76.4 points from 77.3 in January. This was also weaker than the Reuters consensus forecast which predicted a nearly stable reading of 77.2.

ZEW President Achim Wambach said the drop in expectations was probably the result of recent weaker-than-expected figures from industrial production, retail sales and exports.

"Political uncertainty regarding Brexit, the future U.S. economic policy as well as the considerable number of upcoming elections in Europe further depresses expectations," he said.

"Nevertheless, the economic environment in Germany has not significantly worsened," Wambach added.

The German economy grew by 0.4 percent in the fourth quarter and by 1.9 percent in the whole of 2016, data showed on Tuesday, as increased state spending, rising private consumption and construction more than offset a drag from net foreign trade.

(Reporting by Michael Nienaber; Editing by Madeline Chambers)

 

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