ZEW report "clearly shows a general sense of panic amongst investors"
- Annalisa Piazza, a fixed-income strategist at Newedge Strategy
Economic expectations in Germany deteriorated by the most since 1998, data showed on Tuesday. An indicator of economic sentiment slid to -16.9 in June from 10.8 in May, said the Centre for European Economic Research (ZEW). A reading above zero indicates optimism, while a score below zero indicates pessimism.
Yesterday's report "clearly shows a general sense of panic amongst investors," said Annalisa Piazza, a fixed-income strategist at Newedge Strategy in London. It points to "risks of a deeper-than-expected recession" in the euro area, she said.
"This is a hefty decline. This is an indication that the worsening of the debt crisis and the increasing tensions in Spain are impacting Germany," said Juergen Michels of Citigroup. "That should strengthen the ECB in its decision to reduce rates in June," he added.
European stocks advanced on Monday. The Stoxx Europe 600 Index gained 1.60 per cent to 248.27. Germany's DAX Index rose 1.84 per cent while France's CAC 40 Index increased 1.69 per cent.
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