German investor morale improved more than expected in March on expectations of an ECB interest rates cut and positive signs out of China, the ZEW economic research institute said on Tuesday.
ZEW reported a rise in its economic sentiment index to 31.7 points from 19.9 in February, and the March figure exceeded analyst estimates in a Reuters poll for a reading of 20.5.
"More than 80% of those surveyed anticipate that the ECB will cut interest rates in the next six months," said ZEW President Achim Wambach, adding that this could explain a more optimistic outlook for the construction industry.
"The German export sector benefits from the increased economic expectations for China as well as the expected depreciation of the dollar against the euro," he added.
By comparison, ZEW's assessment of the current situation improved only slightly, rising to -80.5 from -81.7 last month and beating a fall to -82.0 that was predicted by analysts.
VP Bank chief economist Thomas Gitzel said the rise in both numbers was positive news for Europe's largest economy and was a reason to hope for improvement in the summer months.
"The German economy is picking up speed - you could even call it a spring awakening in the German economy," he said.
The European Central Bank's vice president, Luis de Guindos, told Greek newspaper Naftemporiki on Tuesday that the bank will be in position to discuss an interest rate cut in June as it receives new data on wages, growth and inflation by then.
With the comment, he joins a long list of policymakers putting the June 6 meeting on the table for a potential start of policy easing.
