German investor confidence rises ahead of elections

German investor confidence rose for the first time in four months in a sign that concern over the risk to growth from the strengthening euro is subsiding.

The ZEW Center for European Economic Research’s index of investor expectations rebounded to 17.0 in September from 10.0 in August.

The reading, days before the region's largest economy holds elections, compares with a median estimate in a Bloomberg survey for an increase to 12.0.

The euro is showing signs of stabilising after climbing 14 per cent against the dollar since the start of the year and prompting European Central Bank President Mario Draghi to warn that policy makers are closely monitoring exchange-rate developments.

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While the gains have weighed on German exports, the Bundesbank said on Monday that it expects the country's economy to continue its strong expansion in the third quarter.

"The solid growth figures in the second quarter of 2017 in combination with a steep rise in bank lending and increasing investment activities by both the government and private firms are likely reasons" for the improvement, ZEW President Achim Wambach said in a statement.

“The worries about the recent strengthening of the euro have, for now, also faded into the background.”

The single currency traded at $1.1986 at 11:45am Frankfurt time, up 0.3 per cent on the day. It has largely fluctuated around current levels this month, after rising from less than $1.04 in late December.

ZEW's gauge for current conditions in Germany rose to 87.9 from 86.7 in August. A measure for expectations in the euro area advanced to 31.7 from 29.3.

German elections, scheduled for Sunday, haven’t been a source of uncertainty, Wambach said. Polls show Chancellor Angela Merkel’s Christian Democratic-led bloc on track to defeat Martin Schulz’s Social Democrats and retain power.

- Bloomberg