Eurozone Sentix index slumps to 7-month low in September

[BERLIN] Sentiment in the eurozone weakened more than expected in September as a slowdown in China weighed on growth expectations, particularly in Europe's largest economy Germany, a survey showed on Monday.

Sentix research group's index tracking morale among investors and analysts in the euro zone slipped to 13.6 in September from 18.4 the previous month.

That was the lowest reading since February and below the Reuters consensus forecast for 16.1.

"While the perception of the current situation remains stable, economic expectations have cooled sharply," Sentix said in a statement. "Investors now see the slowdown in China as well as in other emerging markets as a significant burden for the euro zone's economy, which can no longer be compensated by good developments in the domestic euro zone economy or the United States," Sentix added.

A sub-index of expectations for the euro zone's economy over the next six month tumbled 9.2 points to 12.3 in September, its lowest level since December 2014.

An index tracking Germany fell to 20.6 from 25.7, while the expectations component collapsed to 4.4. "Here expectations have already got very close to the zero line, which means that only a narrow majority are banking on an increase in economic momentum in six months time," Sentix said.

Uncertainty about the economic outlook for China, the world's second biggest economy, have rattled markets around the world in recent weeks.

Germany has the greatest trade exposure to China of the 28 European Union nations as it shipped 6.6 per cent of its exports there last year.

While the economy expanded by 0.4 per cent in the second quarter, industrial orders fell more than expected in July pointing to some weakness in the export engine that supported German growth in the first half of this year.

German industrial output rose in July at its fastest pace so far this year, however, suggesting the engine room of Europe's largest economy made a robust start to the second half despite a turbulent global backdrop.

REUTERS