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German investor sentiment in surprise fall

Tuesday, 21 Jan 2014 | 5:58 AM ET
Joachim Messerschmidt | Photolibrary | Getty Images

German investor and analyst economic sentiment unexpectedly fell in January, sending the euro to a session low against the dollar, but remained at its highest level in nearly eight years.

A monthly survey by Germany's ZEW Center for Economic Research showed economic sentiment eased in January to 61.7 after a rise to 62.0 in December. A Reuters poll showed analysts had expected a figure of 64.0.

The results signalled caution from investors over the outlook for Germany amid signs of a euro zone recovery. The European Central Bank raising its growth forecast for the region in December, predicting gross domestic product to grow 1.1 percent in 2014.

(Read more: French economy struggles as Germany strides ahead)

But economists are positive about the survey which they say remains at a high point.

"The main index slipped a little bit which was against expectations, but it is still at a high level. Deposit the slight fall, it is still a positive survey," Jonathan Loynes, chief European economist at Capital Economics told CNBC in a phone interview.

ZEW's gauge of current conditions showed a strong trend upwards, surging to 41.2 in January from 32.4 in December, and surpassing the forecast of 34.0.

"For months, the surveyed financial market experts have expected an economic upswing. In this month's survey the clearly improved assessment of the current economic situation seems to confirm these expectations," Professor Dr. Clemens Fuest, the ZEW president said in a statement.

France remains big European 'bugbear': Pro
Marc Ostwald, strategist at Monument Securities, outlines expectations for the euro zone and how an acceleration of German growth would impact the region.

Germany has come under fire recently for its export surplus, with critics saying it should do more to help the global economy.

Europe's largest economy has fared particularly well during the financial crisis and could see growth of 1.7 percent in 2014 and 2 percent in 2015, according to the Bundesbank.

Despite the slight easing in economic sentiment, Germany's economy is in strong shape, according to economists.

(Read more: German business: Europe should copy, not criticize surplus)

"The fundamentals of the German economy remain strong," Carsten Brzeski, economist at ING, said in a statement.

"With a solid labor market, higher real wages, the gradual investment pick-up, filled order books and low inventories the German economy seems to be in the starting blocks for a growth acceleration this year."

Click here for the latest on the markets.

—By CNBC's Arjun Kharpal. Follow him on Twitter @ArjunKharpal

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