German investor morale worsened in November to its weakest since February 1993, weighed down by worries about financial market turmoil and the impact of the strong euro, a closely watched survey showed on Tuesday.
The ZEW research institute said its economic sentiment indicator, based on a survey of 269 analysts and institutional investors, fell to -32.5 this month from -18.1 in October. A Reuters survey of economists had pointed to a reading of -20.0.
"German business expectations are imploding right now, a trend that the ECB must wake up to very soon," said David Brown at Bear Stearns. "The ECB needs to switch the policy bias away from upside inflation to downside growth risks."
The European Central Bank left interest rates on hold at 4.0 percent for the fifth month in a row last week and vowed to keep a grip on inflation.
A separate ZEW gauge of current conditions for Germany fell to 70.0 this month from 70.2 in October. The consensus forecast was for a reading of 68.0. A measure of expectations for the euro region fell to -30.0 after -19.0 the previous month.
The survey was conducted between Oct. 29 and Nov. 12.
"Owing to the continuously extending subprime (credit) crisis, the financial market experts have readjusted their economic expectations," the Mannheim-based institute said in a statement.
"The weak U.S. dollar has made business conditions for German exporting firms more difficult," it added.
The euro has hit record highs against the dollar recently, while soaring oil prices close to $100 per barrel are also weighing increasingly on German firms.
"The detrimental effect of exchange rate movements and high energy and raw material costs have made life difficult," Heidelberger Druckmaschinen finance chief Dirk Kaliebe said last week as the print machine maker missed earnings expectations.