ZEW shows dark clouds from China over German economy

Bradenburg Gate in Germany.
Nikada | Vetta | Getty Images
Bradenburg Gate in Germany.

The German ZEW indicator of economic sentiment for July missed analyst expectations, data released on Tuesday showed, prompting a drop in the euro and European stocks as investors grew nervous about the health of the euro zone's biggest economy.

Click here for the latest on the European markets.

The indicator fell by 2.2 points compared to the previous month and is now hovering at 36.3 points. Analysts had expected the number to come in at 39.6.

The institute said experts were still sticking to their overall positive forecast, illustrating their confidence in the robustness of the German economy after rather weak figures for industrial production and foreign trade released recently.

"New dark clouds have started to black out growth prospects of the German economy. These clouds are not coming from the South but from the East. The stuttering and now slowing Chinese economy is a clear cause of concern," ING senior economist Carsten Brzeski said.

"China has become the fifth most important market for German exporters, accounting for roughly 6 percent of total exports. Obviously, a Chinese hard landing would not leave the German economy unharmed."

Contact Europe News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Europe Video

  • Marine Le Pen, and her far-right National Front party, are now a political force to be reckoned with in France. We take a closer look at her life.

  • Greece's ''rocky road': 10-20% chance of Grexit

    When talking about European equities, James Purcell, Cross Asset Strategist at UBS, says that while "Greece is an annoying problem," it can be solved, adding that there's a 10 to 20 percent chance of a "Grexit."

  • Fed hike? Expect volatility in bonds

    How are the bond markets impacted by a possible rate hike from the U.S. Federal Reserve. Darren Ruane, head of fixed interest at Investec Wealth & Investment Limited, believes that future volatility is likely.