German investor confidence falls

Sentiment among German financial experts had been improving

Confidence among German analysts and investors has fallen in July for the first time since October 2008, an influential survey suggests.

The findings of the Zew economic sentiment index will temper hopes of recovery in Europe's largest economy, observers say.

The index, which measures expectations of economic activity over the next six months, fell to 39.5 from 44.8 in June.

A Reuters poll had suggested analysts' sentiment was improving.

But Zew said that respondents had expressed concern over whether lending to firms and households would work out - something that posed "considerable risk for the future development of the German economy".

A separate measure of current conditions rose slightly, to -89.3 from -89.7.

Germany's economy shrank by 3.8% in the first quarter of 2009 on the back of slumping demand for exports.

Late last month, a separate survey suggested that firms in Germany were more confident than they had been for seven months.

The Ifo index climbed for the third month in a row to 85.9 in June from 84.2 in May - better than many analysts had been expecting.