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German investor confidence drops

 

Ap
Tuesday 17 July 2012 05:59 EDT
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Investor confidence has fallen unexpectedly in Germany according to a new survey, in another negative sign for the eurozone economy.

Germany's ZEW institute said its index fell this month, for the third month in a row, to minus 19.6 points from minus 16.9 in June. Market analysts had predicted a small increase to minus 15.0.

Germany is the largest economy in the 17-country eurozone and has a massive impact on currency union and its efforts to resolve a crisis over too much government debt. The German economy is still expected to show modest growth this year.

Economic indicators have worsened recently as the debt crisis rages on. The European Central Bank cut its key interest rate on July 5 to a record low 0.75% to stimulate the eurozone economy.

Meanwhile, Spain has raised 3.6 billion euro (£2.8 billion) in short-term debt at significantly lower interest rates in the first debt auction since the government announced a big new austerity package.

The Spanish treasury sold 2.6 billion euro (£2 billion)in 12-month bills at an average interest rate of 3.9%, down from 5.07% in the last such auction on June 19. It also sold 961 million euro (£754 million) in 18-month bills at a rate of 4.24%, down from 5.10% that same day.

Demand exceeded supply by more than two and nearly four times, respectively.

The auction is being closely watched, as it marks the first since Spain's government announced a 65 billion euro (£51 billion) deficit-cutting austerity package last week. Spain's banks are being bailed out and the government is trying to avoid a rescue package itself.

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