Investor morale hits two-year high in Germany

German investor sentiment kicked higher in May, a closely-watched survey showed on Tuesday, reaching a two-year high.

The latest ZEW Indicator of Economic Sentiment came in at 47.1, a 4.2-point increase on April.

The highest level since February 2022, when Russia invaded Ukraine, it was also better than expected, with most analysts forecasting a reading closer to 46.0.

The assessment of the current economic situation in Germany - the Eurozone’s biggest economy - also improved, rising 6.9 points to -72.3.

Achim Wambach, president of the ZEW economic research institute, said: "The confidence increases. Following the stronger-than-expected growth of the German economy in the first quarter of 2024, both the assessment of th current situation and economic expectations have become more favourable.

"Signs of an economic recovery are growing, bolstered by better assessments of the overall Eurozone and of China as a key export market."

The German economy, which is heavily reliant on manufacturing and exports, has been hit hard by surging energy costs, record inflation, higher interest rates and weaker global demand.