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German investor morale recovers more than expected - ZEW

Shopping carts with logos of German supermarket chain Rewe are pictured at a shopping centre in Hanau

By Maria Martinez

BERLIN (Reuters) - German investor sentiment continued on its recovery path in February, the ZEW economic research institute said on Tuesday, as the economic outlook for the euro zone's largest economy has considerably brightened.

The institute's economic sentiment index rose to 28.1 from 16.9 in January, posting its fifth consecutive monthly increase. A Reuters poll had pointed to a February reading of 22.0.

"As in the previous month, the increase in expectations can be traced back to higher profit expectations in the energy- and export-oriented sectors, as well as the consumer-related parts of the economy," ZEW President Achim Wambach said.

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The assessment of the economic situation in Germany also continued to improve, rising for the fourth month in a row, though it remained in negative territory. The index rose to minus 45.1 points, up 13.5 points from the previous month.

Although the current situation is still assessed as relatively unfavourable, a large number of survey participants expect the economic situation to improve in six months' time, Wambach said.

"These data are not always reliable indicators for conditions in the wider economy, but they are now pointing to a pick-up in economic activity and economic sentiment," said Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics.

According to Vistesen, these expected improvements are primarily indicated by the split between rising expectations and a still-depressed current conditions index.

"In terms of sentiment, a mild recession still seems to be only the worst-case scenario," said Alexander Krueger, chief economist at Hauck Aufhaeuser Lampe Privatbank.

Nevertheless, Krueger added that the fact the German economy is holding up reasonably well should not hide the structural weaknesses that have developed over time.

(Reporting by Friederike Heine and Maria Martinez; Editing by Miranda Murray, Rachel More and Jan Harvey)