Germany's ZEW institute has said its survey of investor sentiment tumbled to -22.2 in September from -5.6 in August.
The sharp drop was blamed mainly on a slowdown in German exports due to a cooling US economy. Analysts had been predicting a fall to -6.9 points.
The sharp decline in the poll, which is based on forecasts by experts working in the financial sector, is a sign that the economy is set to slow in 2007. ZEW said this was because of a projected fall in exports next year, a planned increase in VAT to 19%, and expectations of higher interest rates.
ZEW said that while experts surveyed by the institute were more pessimistic about the future of the German economy, the assessment of the country's current economic climate again improved. The current economic climate indicator rose to 38.9 points in September from 33.6 in August.
