German investor sentiment tumbled in March as concerns about a new financial crisis ended a five-month streak of consecutive increases, the ZEW economic research institute said.
The institute's index assessing the outlook for the economy over the next six months fell by 15.1 points to a reading of 13 in March, below the 17.1 forecast of analysts polled by Reuters.
"The international financial markets are under strong pressure," and the high level of uncertainty is reflected in the economic expectations, said ZEW President Achim Wambach.
The market spillover from the collapse of US mid-sized lenders Silicon Valley Bank and Signature Bank this month triggered the demise of 167-year-old Credit Suisse.
Investors are concerned about potential bombs ticking elsewhere in the financial system.
Investors' concerns about banking sector turbulence weighing on the economy are not unjustified, said VP Bank chief economist Thomas Gitzel.
"The focus is less on the fear of further bank failures than on the question of whether banks on both sides of the Atlantic will now become even more restrictive," he said.
Hauck Aufhaeuser Lampe private bank chief economist Alexander Krueger downplayed the drop in expectations as an obvious reaction to recent developments. "If the bank worries are not confirmed, there is great potential for recovery," he said.
The persistently poor assessment of the economic conditions was more meaningful in economic terms, added Krueger.
The assessment of the economic situation in Germany fell deeper into negative territory in March, dropping to -46.5 from -45.1 the month before and below analysts' prediction of -44.3.
