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UPDATE 1-Upbeat export expectations boost German investor morale

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(Adds economist, background)

BERLIN, Jan 19 (Reuters) – Investor sentiment in Germany rose by more than expected in January on improved expectations for exports, buoying the outlook for Europe’s largest economy, the ZEW economic research institute said on Tuesday.

The survey of investor economic sentiment increased to 61.8 from 55.0 points the previous month, ZEW said. A Reuters poll had forecast a rise to 60.0.

“Despite the uncertainty about the further course of the lockdown, the economic outlook for the German economy has improved slightly,” ZEW President Achim Wambach said in a statement.

“The results of the ZEW Financial Market Survey in January show that export expectations in particular have risen significantly,” he said.

A separate gauge of current conditions edged up to -66.4 from -66.5 points the previous month. That compared with a consensus forecast of -68.5 points.

“It doesn’t look so bad after all,” said Thomas Gitzel, an economist at VP Bank Group. “The labour market is doing relatively well in view of the adverse circumstances and industry is increasingly gaining momentum.”

Germany’s economy shrank by 5.0% in 2020, less than expected and a smaller contraction than during the global financial crisis. Unprecedented government rescue and stimulus measures helped lessen the shock of the COVID-19 pandemic.

The Bundesbank said on Monday the economy is managing to stay afloat but could suffer a “sizeable setback” if coronavirus curbs are extended again.

Chancellor Angela Merkel is set to agree with regional leaders to extend a lockdown for most shops and schools until mid-February as part of a package of steps to try to rein in the coronavirus, sources said before talks on Tuesday.

Earlier this month, Daimler Chief Executive Ola Kaellenius said the German carmaker was starting the year with optimism after a strong finish to 2020.

Reporting by Paul Carrel; editing by Thomas Seythal, Larry King

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