Morale among Germany's analysts and investors sank in November as the crisis in the euro zone pounded its top economy, which looks increasingly at risk of joining the region's periphery in recession. Tuesday's unexpectedly gloomy survey from the ZEW think tank followed a run of domestic data showing the private sector contracting, business sentiment plummeting, jobless rates rising and industrial orders dropping.
Germany's No 1 utility, E.ON, warned of weakening power demand in Europe and said it may close plants, cutting its profit outlook for next year. British mobile phone giant Vodafone wrote down the value of its business in Spain and Italy by 5.9 billion pounds ($9.4 billion) and lowered its cash flow forecast as recession-hit southern Europeans cut back on mobile usage. Gross domestic product data due on Thursday is expected to show growth in Germany slowed to 0.2 percent in the third quarter from 0.3 percent in the second as firms unnerved by the crisis postponed investments and lost business abroad.
ZEW suggested weakening economic sentiment could be due to disappointing leading indicators such as industrial orders, which dropped by 3.3 percent on the month in September - a worrying sign given that manufacturing accounts for a third of German GDP.
Last week data showed German exports slid by 2.5 percent in September, the fastest pace since late last year, due to declining demand in the euro zone. Imports fell 1.6 percent. ZEW's gauge of current conditions slipped to 5.4 from 10.0 in October, coming in below the consensus forecast in a Reuters poll for a reading of 8.0.
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