German investor confidence slid in July after 8-mo rise

Investor confidence in Germany, Europe's biggest economy, slid in July after an 8-month rise as worries over bank lending clouded optimism over improving industrial data, a closely watched survey show. The ZEW institute said its monthly index, which measures investors' outlook for the next six months, slid to 39.5 points this month from 44.8 in June. Germany's export-dependent economy sank into recession last year as the global downturn dried up demand for its mfr. goods. However, recent data shown industrial orders & production beginning to recover -- even as worry persist over banks' reluctance to lend. "A considerable risk for the future development of the German economy is whether lending to firms & households works out," it said. Investors view of Germany's current situation was barely changed in July. A subindex measuring assessment rose by just 0.4 points to - 89.3 in July. Economists expected a slight rise, or at worst a smaller dip, in the overall index. Still, it is unlikely in our view this setback signals a trend reversal down," economists at Commerzbank wrote. "1st, the movement can hardly be described as significant given the high volatility of the index. 2nd, 'hard' economic data should increasingly turn upwards in the coming months, so the current doubts on the sustainability of emerging turnaround should abate," they added. ZEW described the drop as only a slight correction of economic expectations, but latest reading confirmed forecasts by the gov't. & others GDP will shrink by 6% this year -- by far the worst performance since World War II. "Growth rates will likely move around 0% til the 1st months of 2010," said ZEW president Wolfgang Franz. Official 2nd-Q growth figures are due in Aug. The index is based on a monthly survey of 350 financial experts by the Mannheim-based ZEW.