Fear of political upsets mutes German investors' mood

Confidence among German investors recovered slightly in March from a sharp fall in February, a closely watched survey showed Tuesday, but remains below expectations as political uncertainty persists.

The ZEW institute's monthly barometer climbed 2.4 points to reach 12.8 points, making up some of the 6.2 points lost in February.

Analysts surveyed by Factset had predicted a faster rebound, to 13.2 points in March.

"Risks from the upcoming elections in several EU countries are holding uncertainty for the German economy at a relatively high level," ZEW chief Achim Wambach said in a statement.

Germany, Europe's largest economy, currently enjoys strong industrial production and exports as well as low levels of unemployment, meaning people have money to spend.

That was reflected in investors' assessment of the current situation at home, which brightened slightly over the reading in February.

And the financial market experts surveyed by ZEW saw strong improvements in both present economic performance and the future outlook in Germany's eurozone neighbours.

"Good news about the German economy appears to have outweighed concerns about politics elsewhere" in March, Capital Economics analyst Jennifer McKeown commented.

But a drumbeat of fear over possible gains for anti-Europe, anti-globalisation parties in Dutch, French, and German elections spread over the coming months kept investors' mood muted.

Business is also concerned about the impact of protectionist policies from US President Donald Trump, elected on an "America First" platform promising to slash trade deficits.