German investor confidence recorded a surprise fall in July, a closely watched survey released on Tuesday showed, which fuelled fresh worries about the growth outlook for Europe’s biggest economy.

The Mannheim—based ZEW economic research institute said its index gauging the mood among analysts and institutional investors dropped to 36.3 points this month from 38.5 in June.

Analysts had expected the index, which shows economic expectations for the next six months, to rise to 40.

“The lack of further noticeable gains in business sentiment over the recent months indicates that Germany’s economic dynamism moderated again as the country’s economy entered the third quarter,” said Elga Bartsch, economist with the US bank Morgan Stanley.

The unexpected slide in the survey caused shares to fall across Europe.

The benchmark Stoxx Europe 600 index traded down 0.31 per cent at 296.33 points after closing at the highest level since early June on Monday.

The release of the latest ZEW survey also came against the backdrop of concerns about the state of the world’s second biggest economy, China, as a well as signs of renewed tensions in the eurozone, notably in Greece and Portugal.

Still, ZEW chief Clemens Fuest believes investors remain positive about Germany’s economic outlook.

“The financial market experts stick to their overall positive forecast,” he said.

“This illustrates their confidence in the robustness of the German economy despite the recent rather weak industrial production and foreign trade figures.” Based on a survey of 256 analysts, the indicator’s gauge measuring current economic conditions in the country ended three consecutive monthly falls to gain 2 points in July to 10.6.

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