German business sentiment fell more than expected to the lowest level so far this year in May, signalling that Europe's largest economy is expanding at a slower rate after the strongest quarterly growth in three years between January and March.
The Munich-based Ifo think tank's business climate index, based on a monthly survey of some 7,000 firms, decreased to 110.4 from an unrevised 111.2 in April.
Expectations in a Reuters poll of 42 economists had been for a fall to 110.9.
The euro fell to a three-month low against the dollar after the news.
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